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  4. Elizabeth Holmes now has a shorter prison sentence, but she'll still owe victims $452 million along with her former Theranos partner. She might never have to fully pay up.

Elizabeth Holmes now has a shorter prison sentence, but she'll still owe victims $452 million along with her former Theranos partner. She might never have to fully pay up.

Sindhu Sundar   

Elizabeth Holmes now has a shorter prison sentence, but she'll still owe victims $452 million along with her former Theranos partner. She might never have to fully pay up.
  • A federal court ordered Elizabeth Holmes and Sunny Balwani to pay $452 million.
  • The Theranos founder and her former business partner may never fully pay it.

As Elizabeth Holmes serves her prison sentence — which now appears to have been reduced to about 9 1/2 years from over 11 years — victims of her fraudulent blood-testing company Theranos may wonder how and if they may see any of the $452 million in restitution that a court ordered in May.

A California federal court's order identified investors including News Corp mogul Rupert Murdoch as "victims" of the Theranos fraud, as well as chain stores including Walgreens and Safeway, which the court said had sent "millions of dollars to Theranos."

Holmes was convicted in January 2022 on conspiracy and wire fraud charges, but her financial challenges had been publicized for years by then.

Her net worth plummeted from $4.5 billion in her heyday to $0, according to Forbes. In 2019, her then-attorneys asked an Arizona federal court for permission to drop her as a client in a civil case there, writing that she already hadn't paid the firm for over a year at that point, and that the firm had lost hope that she would do so.

So how will Holmes and her former business partner Sunny Balwani navigate a $452 million restitution order? The short answer is that those funds may never get fully paid out, experts said. Federal officials help collect restitution, including through assets seized in investigations, and by taking a portion of the earnings of defendants ordered to pay them, according to a 2018 report by the US Government Accountability Office.

"Assets that the government froze at the onset of a prosecution might be available for restitution," said Daniel Richman, a professor at Columbia Law School, and a former federal prosecutor in Manhattan. "But generally, most restitution is never paid."

How prosecutors try to recover funds for restitution

Prosecutors investigating financial crimes try to get a jump on the restitution process before they even bring any charges. They can conduct forensic analyses of assets like bank accounts or real estate or cars, of the targets they're investigating.

Of course, the prosecutors would need a court to sign off on any warrants, according to Evan Gotlob, a partner at Saul Ewing LLP, and a former federal prosecutor in cities including Boston. And prosecutors have to demonstrate that such extreme measures are warranted, he said.

"You can do it pre-indictment, but you still need a lot of evidence," he said. "They don't just give you access to people's accounts or their home without that evidence."

Holmes may not be able to fully pay

Prosecutors and probation officers have some ways to try recovering restitution funds, and a decadeslong window of time to do it, according to the Justice Department's website.

But it might still come down to a question of what resources the defendant is left with, a representative for the US Attorney's Office in Northern California, which prosecuted the case against Holmes, told Insider in a statement on Wednesday.

"Unlike fines, restitution is imposed without consideration of a defendant's ability to pay, and the chance of recovery largely depends on whether a defendant has sufficient assets to repay their victims," the representative said.

It's not clear what recoveries prosecutors may have made so far from their investigation into Holmes that could pay toward restitution. The representative for the US Attorney's Office did not comment on that point. Prosecutors have previously told the court that Holmes was living well at a $13,000 a month residence.

Attorneys for Holmes and Balwani did not respond to Insider's emailed requests for comment.

According to the restitution order, Holmes and Balwani are responsible for $125 million in restitution to Murdoch, $40 million to Walgreens, and $14.5 million to Safeway.

Murdoch declined to comment through a representative. Representatives for Walgreens and Safeway did not respond to Insider's request for comment.

"In a situation like this, I think her assets have been taken through the grinder," Gotlob said. "There's been a lot of investigations, and it doesn't seem there's a lot there."


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