By Meghan Bobrowsky

Elizabeth Holmes lost her bid to overturn her conviction, leaving the founder of the defunct blood-testing technology startup Theranos with few remaining legal options.

Holmes is currently serving an 11-year sentence at an all-female federal prison camp in Bryan, Texas. She can now either petition for another review of her case with more judges from the appeals court -- a process called rehearing en banc -- or try to petition the Supreme Court directly.

However, the appeal she just lost was Holmes's best chance at reversing her fraud conviction, according to appellate lawyer Raffi Melkonian, who followed her criminal trial. The Supreme Court receives more than 7,000 petitions a year and chooses to hear fewer than 200.

"Both are long shots," said Melkonian, who is based in Houston. "Now that she's lost, her pathways to winning the case have narrowed substantially."

Holmes was convicted of four counts of defrauding investors in early 2022. She appealed her guilty verdict shortly after being denied a new trial by U.S. District Judge Edward Davila.

In a 130-page document filed to the Ninth Circuit Court of Appeals, Holmes's lawyers took issue with decisions Davila made during the trial, mainly around what testimony was allowed to be heard by the jury. The trial in San Jose, Calif., began in August 2021 and lasted nearly four months, during which 32 witnesses -- including Holmes herself -- testified.

Holmes's team presented its appeals case to a panel of three Ninth Circuit judges at a hearing in June. The judges peppered both sides with questions during the roughly 45-minute session.

The appeals court also affirmed the conviction of Holmes's No. 2 at Theranos and former boyfriend, Ramesh " Sunny" Balwani, who was charged alongside Holmes in 2018 before the cases were separated and each faced individual trials.

Balwani was convicted of 12 counts relating to defrauding investors and patients and was sentenced to nearly 13 years in prison.

"The vision sold by Holmes and Balwani was nothing more than a mirage," U.S. Circuit Judge Jacqueline Nguyen wrote in the decision, affirming the lower court's decisions at trial and sentencing.

The court also affirmed the $452 million restitution order that Holmes and Balwani are jointly required to pay back to investors.

Holmes -- who is 41 years old and has two young children with partner Billy Evans -- founded Theranos after dropping out of Stanford University in 2003 at age 19. She sought to revolutionize the blood-testing industry with her startup and ran the company for 15 years.

At its peak, Theranos was valued by investors at more than $9 billion, making it the 10th-largest venture-capital-backed startup at the time. Holmes testified during her trial that she owned about half of it -- making her shares worth about $4.5 billion on paper.

The company employed hundreds of scientists, engineers and marketers, and Holmes claimed it could cheaply and quickly run more than 200 health tests using a proprietary device.

In 2015, The Wall Street Journal started running a series of articles calling into question Holmes's claims about the technology. The Journal reported that most of Theranos's blood tests weren't run on the company's proprietary devices -- but instead on commercial blood analyzers that had been altered to work with small amounts of blood.

The Securities and Exchange Commission charged Theranos, Holmes and Balwani with civil-securities fraud in 2018. Shortly after, federal prosecutors brought criminal-fraud charges against the two. Theranos formally dissolved a few months later.

Holmes's criminal trial centered on the device and her claims. The government brought 11 charges of wire fraud and conspiracy to commit wire fraud against Theranos investors and patients.

Holmes was convicted on three of the fraud counts and one of the conspiracy counts against investors. She was acquitted on four counts against patients, and the jury failed to reach a verdict on the remaining three counts.

Write to Meghan Bobrowsky at meghan.bobrowsky@wsj.com

(END) Dow Jones Newswires

February 24, 2025 14:40 ET (19:40 GMT)

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