Former Theranos CEO Elizabeth Holmes (L) arrives in federal court with her mother Noelle 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 company, Theranos, as she tries to delay her 11-year prison term, according to a lawsuit.
Theranos ABC, a company formed on behalf of its creditors, claims in a lawsuit filed in California Superior Court in Santa Clara County that “Holmes has not made any payments on any of the promissory notes.”
The lawsuit was filed in December 2022, but it only became public on Friday when Holmes appeared in court.
According to the breach of contract lawsuit, Holmes issued three promissory notes while she was CEO of the blood-testing company. According to the lawsuit, the promissory notes were 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.
According to the complaint, “Theranos ABC demanded payment of Promissory Note #1 and Promissory Note #2 from Holmes, but Holmes failed to pay any amounts on the promissory note.”
Attorneys for Theranos ABC did not immediately respond to a request for comment.
Two promissory note payments were due for the first time in 2016, and the third in 2018. In July 2016, Theranos’ board of directors, which at the time included Holmes, former Defense Secretary James Mattis, attorney David Boice, former Bechtel Group CEO Riley Bechtel and former Wells Fargo CEO Richard Kovacevich, changed the terms to extend the bonds by five years. The first two bills are past due and the third is due in December, the lawsuit says.
On Friday, Holmes returned to federal court in San Jose, Calif., asking to delay her prison date next month while she appeals her sentence. The man holding the lawsuit approached Holmes at her attorneys’ table in the courtroom. The man, who was increasingly worried, was removed by the marshals. It could not be immediately confirmed if he was the process server who tried to serve the lawsuit on Holmes.
In January 2022, a jury found Holmes guilty of four counts of fraud and conspiracy. On April 27, 2023, Holmes was ordered to turn himself in to begin serving his prison term. Her attorneys said they plan to appeal Holmes’ case to the Ninth Circuit Court of Appeals.
After her conviction last year, Holmes became pregnant and gave birth to her second child.
Holmes’ attorney cited several reasons why she is not a flight risk, including her young children and the fact that she has been out on bail for more than a year without a flight.
However, the government pointed to a one-way ticket Holmes and her partner Billie Evans booked to Puerto Vallarta, Mexico, days after her conviction.
Holmes is also fighting prosecutors over how much restitution she should pay. Prosecutors are seeking nearly $900 million from her, while Holmes claims the government failed to prove investors relied on her claims.
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 after a series of failed regulatory audits and articles by then-Wall Street Journal reporter John Carrey.