Elizabeth Holmes Owes Theranos Over $25 Million, Lawsuit Claims

Former Theranos 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 $25million to creditors of her former company Theranos as she tries to delay her 11-year prison sentence, a lawsuit has heard.

Theranos ABC, a company formed on behalf of its creditors, alleges in a lawsuit filed in California Superior Court in Santa Clara County that “Holmes made no payment under any of the promissory notes “.

The lawsuit was filed in December 2022, but was not revealed 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 bankrupt blood testing company. The promissory notes were as follows, according to the lawsuit:

August 2011 in the amount of $9,159,333.65.

December 2011 in the amount of $7,578,575.52.

December 2013 in the amount of $9,129,991.10.

According to the complaint, “Theranos ABC demanded payment for Promissory Note #1 and Promissory Note #2 from Holmes, but Holmes paid no amount under the promissory note.”

Attorneys for Theranos ABC did not immediately respond to a request for comment.

Two of the promissory note payments were first due in 2016 and the third in 2018. attorney David Boies, former Bechtel Group CEO Riley Bechtel and former Wells Fargo CEO Richard Kovacevich amended terms to extend the ratings for five years. The first two notes are overdue and the third is due in December, the lawsuit said.

Holmes returned to federal court in San Jose, Calif., on Friday, asking to delay her report to jail until next month while she appeals her conviction. A man holding the case approached Holmes at his lawyers’ table inside the courtroom. The man, more and more agitated, is kidnapped by marshals. It could not be immediately confirmed whether it was a bailiff trying to serve the lawsuit on Holmes.

In January 2022, a jury found Holmes guilty on four counts of wire fraud and conspiracy. Holmes was ordered to surrender to begin his prison sentence on April 27, 2023. His attorneys have reported that they intend to appeal Holmes’ case to the Ninth Circuit Court of Appeals.

Following her guilty verdict last year, Holmes became pregnant and gave birth to a second child.

A lawyer for Holmes cited several reasons why she is not a flight risk, including her young children, and why she has been out on bail for more than a year without running away.

However, the government reported a one-way trip that Holmes and his partner, Billy Evans, had booked to Puerto Vallarta, Mexico, days after his sentencing.

Holmes is also battling with prosecutors over how much restitution she should pay. Prosecutors want her to pay nearly $900 million while Holmes argues the government has failed to prove investors relied on her representations.

U.S. District Court Judge Edward Davila expects to rule on both motions in early April.

Holmes founded Theranos in 2003 after leaving Stanford, with the promise of revolutionizing the healthcare industry. The company closed in 2016 following a series of failed regulatory inspections and reporting by then-Wall Street Journal reporter John Carreyrou.

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