Elizabeth Holmes, the disgraced founder of healthcare company Theranos, owes $452 million in restitution to the company’s investors, U.S. district judge Edward Davila ordered in a ruling yesterday (May 16). The biggest beneficiary will be Rupert Murdoch, the billionaire media mogul and News Corp chairman, who invested $125 million in the hoax.
Last year, a jury found Holmes guilty of conspiracy and wire fraud in relation to Theranos, a blood testing company once worth $9 billion based on Holmes’s misrepresentations of its financial status and the technology to investors. Sunny Balwani, Holmes’s former business partner, is also being held liable. Balwani began his 13-year prison sentence last month, while Holmes is continuing her attempt to delay her 11-year sentence.
Murdoch reportedly invested in Theranos between 2014 and 2015, before the Wall Street Journal’s reporting revealed missteps within the company. The subsequent investigations by federal agencies led investors to lose their money. The $125 million payment is 1.59 percent of Murdoch’s $7.88 billion net worth, as calculated by Bloomberg. Holmes and Balwani must also pay $40 million to Walgreen, which invested in the company and provided the blood tests in its pharmacies, and $14.5 million to Safeway, which planned to supply tests in stores.
Theranos raised $1.3 billion in funding, according to Crunchbase data. Other high-profile investors include Tim Draper, the venture capitalist and founder of Draper Fisher Jurvetson; Larry Ellison, Oracle executive chairman; and the Walton family, whose wealth comes from its investment in Walmart. ATA Ventures, Partner Fund Management and Fortress Investment Group participated in the funding rounds as well, according to Crunchbase.
Despite Murdoch’s huge stake in News Corp and Fox, he hasn’t made many investments in his career. In addition to Theranos, he put money in late-stage rounds of Xunlei and Cyanogen, according to Crunchbase. Xunlei is a Chinese computing and blockchain company, and Cyanogen is an open-source software company.
It is unclear how the co-conspirators could actually pay the restitution. While Forbes pegged Holmes as one of the U.S.’s richest self-made women with a net worth of $4.5 billion in 2015, after investigations began, her net worth changed to $0. In 2019, Holmes married Billy Evans, whose family runs three luxury hotels in San Diego, California. Evans’s net worth is often cited at $10 million. Balwani is reportedly worth $85 million, which still isn’t enough to cover the fees.
While defendants can make partial payments, it is rare they pay the full value of restitution, according to the Department of Justice.
