Lawsuit: Elizabeth Holmes Owes Theranos Big Bucks

Breach of contract lawsuit filed against ex-CEO says she owes $25M in promissory notes
By Jenn Gidman,  Newser Staff
Posted Mar 20, 2023 7:47 AM CDT
Suit: Elizabeth Holmes Owes Theranos $25M
Former Theranos CEO Elizabeth Holmes leaves federal court in San Jose, California, on Friday.   (AP Photo/Jeff Chiu)

As Elizabeth Holmes continues to try to delay the beginning of her 11-year prison sentence, new trouble has popped up, this one financial. The Guardian reports that a breach of contract lawsuit against the former Theranos CEO filed in December emerged Friday during Holmes' latest court appearance in California, claiming she owes the company more than $25 million and hasn't paid any of it back yet. Per CNBC, the complaint filed by Theranos ABC, a company set up to represent Theranos' creditors, in the Superior Court of California in Santa Clara County alleges that Holmes executed three promissory notes while she was in charge of the blood-testing firm: one in August 2011 for $9,159,333.65; one in December of that same year for $7,578,575.52; and one in December 2013 for $9,129,991.10.

The first two notes were due in 2016, and the third in 2018, but Theranos' board (which included Holmes) ended up extending the deadlines by five years. That means that now, the first two notes are overdue, and the third will come due in December. It appears that a process server tried to confront Holmes during her Friday appearance in the San Jose courtroom with the suit in hand, attempting to approach her legal team's table. "The man, who increasingly grew agitated, was removed by marshals," notes CNBC. Meanwhile, "Holmes didn't appear flustered by the disruption," per the AP.

There are other financial matters at play in Holmes' case, in which she's been convicted of defrauding investors: Prosecutors want her to fork over close to $900 million in restitution, though her legal team is pushing back on that. Holmes, 39, is currently supposed to begin her prison sentence on April 27, though she's fighting that start date and asking to remain free as her appeal works its way through the system. Her attorneys argue she's not a flight risk, as evidenced by the fact that she recently gave birth to her second child, as well as that she's remained free on bail for more than a year and hasn't fled. Prosecutors, however, have noted that Holmes and her romantic partner, Billy Evans, had booked a one-way ticket to Mexico in the days after her January 2022 conviction. (More Elizabeth Holmes stories.)

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