Former Therano CEO Elizabeth Holmes (C) arrives in federal court with her mother Noel Holmes (L) and father Christian Holmes on September 1, 2022 in San Jose, California.
Justin Sullivan | Getty Images
Elizabeth Holmes has failed to repay more than $25 million to creditors of her former Theranos company as she seeks to delay her 11-year prison sentence, according to a lawsuit.
Theranos ABC, a company formed on behalf of its creditors, claims in a lawsuit filed in the Superior Court of California in Santa Clara County that “Holmes has not made any payments under any of the promissory notes.”
The suit was filed in December 2022, but didn’t come to light until Friday, when Holmes appeared in court.
According to the breach-of-contract lawsuit, Holmes executed three promissory notes while she was CEO of the failed blood-testing company. The promissory notes were, according to the lawsuit:
August 2011 in the amount of USD 9,159,333.65.
December 2011 in the amount of $7,578,575.52.
December 2013 in the amount of USD 9,129,991.10.
According to the complaint, “Theranos ABC has demanded payment of Promissory Note #1 and Promissory Note #2 from Holmes, but Holmes has failed to pay any promissory note amounts.”
Lawyers for Theranos ABC did not immediately respond to a request for comment.
Two of the promissory note payments are not due until 2016, and the third is due in 2018. In July 2016, Therano’s board of directors, which at the time included Holmes, former Defense Secretary James Mattis, attorney David Boies, former Bechtel Group CEO Riley Bechtel and former Wells Fargo CEO Richard Kovacevich, amended the terms to extend the notes by five years. The first two bills are overdue and the third is due in December, the lawsuit said.
Holmes returned to federal court in San Jose, California on Friday and asked to delay her report date to prison next month while she appeals her conviction. A man holding the trial approached Holmes at her attorney’s table inside the courtroom. The man, who became increasingly agitated, was removed by marshals. It could not be immediately confirmed if he was a process server trying to serve the trial on Holmes.
In January 2022, a jury found Holmes guilty on four counts of fraud and conspiracy. Holmes was ordered to turn herself in to begin her prison term on April 27, 2023. Her attorneys have signaled they intend to appeal Holmes’ case to the Ninth Circuit Court of Appeals.
After her conviction last year, Holmes became pregnant and gave birth to a second child.
An attorney for Holmes cited several reasons explaining why she is not a flight risk that included her young children and that she has been free on bail for more than a year without fleeing.
But the government pointed to a one-way ticket that Holmes and her partner, Billy Evans, had booked to Puerto Vallarta, Mexico days after her conviction.
Holmes is also arguing with prosecutors over how much restitution she should pay. Prosecutors want her to pay nearly $900 million while Holmes claims the government failed to prove investors relied on her representations.
U.S. District Judge Edward Davila plans to rule on both motions in early April.
Holmes founded Theranos in 2003 after dropping out of Stanford, promising to revolutionize the healthcare industry. The company shut down in 2016 after a series of failed regulatory inspections and articles by then-Wall Street Journal reporter John Carreyrou.