Elizabeth Holmes hasn’t repaid over $25 million to creditors of her former Theranos company while she seeks to delay her 11-year prison sentence, according to a lawsuit.
Theranos ABC, a company established 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 on account of any of the Promissory Notes.”
The suit, filed in December 2022, came to public attention on Friday when Holmes appeared in court.
The breach of contract suit states that Holmes executed three promissory notes during her tenure as CEO of the failed blood-testing company. The promissory notes are detailed in the lawsuit as follows:
– 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.
The complaint states, “Theranos ABC has demanded payment of Promissory Note #1 and Promissory Note #2 from Holmes, but Holmes has failed to pay any amounts on account of Promissory Note.”
Attorneys for Theranos ABC did not immediately respond to a request for comment.
Two of the promissory note payments were initially due in 2016, and the third was due in 2018.
In July 2016, Theranos’ board of directors, which included Holmes, former Secretary of Defense James Mattis, attorney David Boies, former Bechtel Group CEO Riley Bechtel, and former Wells Fargo CEO Richard Kovacevich, modified the terms to extend the notes by five years.
The first two notes are overdue, and the third is due in December, according to the suit.
Holmes returned to federal court in San Jose, Calif. on Friday, seeking to delay her prison report date next month while she appeals her conviction.
Inside the courtroom, a man holding the lawsuit approached Holmes at her attorneys’ table.
The man, who became increasingly agitated, was removed by marshals. It could not be immediately confirmed if he was a process server attempting to serve the suit on Holmes.
In January 2022, a jury found Holmes guilty on four counts of wire fraud and conspiracy. She was ordered to begin her prison sentence on April 27, 2023. Her attorneys have indicated their intention 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 explaining why she’s not a flight risk, including her young children and the fact that she has been free on bail for over a year without fleeing.
However, the government highlighted a one-way ticket Holmes and her partner, Billy Evans, had booked to Puerto Vallarta, Mexico, days after her conviction.
Holmes is also contesting with prosecutors over the amount of restitution she should pay. Prosecutors are seeking nearly $900 million, while Holmes argues that the government failed to prove investors relied on her representations.
U.S. District Court Judge Edward Davila plans to rule on both motions in early April.
Holmes founded Theranos in 2003 after dropping out of Stanford, with the promise of revolutionizing the healthcare industry.
The company shut down in 2016 following a series of failed regulatory inspections and articles by then-Wall Street Journal reporter John Carreyrou.
