How Silicon Valley fervor explains Elizabeth Holmes' 11-year prison sentence

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PO1 William "Chip" Nagel
..."And Theranos, like so many buzzy startups, was flush with investment cash. It raised some $945 million from the likes of media mogul Rupert Murdoch, Oracle founder Larry Ellison and former Secretary of Education Betsy DeVos.

Yet Holmes was sentenced for just a fraction of the nearly $1 billion of investment Theranos had raised.

Davila identified ten investors who were defrauded and came up with this number: $121 million, which the judge said was how much investors lost when offset by the amount Theranos stock would have been worth without Holmes' deceit.

To put it another way, Holmes received more than a decade in prison over just about 10% of what Theranos raised.

"The numbers in Silicon Valley are so out of whack with reality that these guideline sentences become enormous," said Jeff Cohen, a former federal prosecutor who now teaches at Boston College Law School. "If she were running a widget factory by the same conduct, she would have received much less."

While other Silicon Valley executives have been accused of wrongdoing, Holmes is the first CEO of a major tech firm to be criminally prosecuted and sentenced to prison.

That means she is the first in the industry to learn that raising hundreds of millions of dollars will not just send a startup's valuation soaring, but if convicted of fraud in federal court, it could make serious prison time all but inevitable — potentially a warning to other imploded tech firms now under scrutiny, like Sam Bankman-Fried's cryptocurrency exchange FTX."...