Elizabeth Holmes owes Theranos over $25 million, the lawsuit says

Former Theranos CEO Elizabeth Holmes (C) arrives in federal court with her mother Noel Holmes (L) and father Christian Holmes in San Jose, California, September 01, 2022.

Justin Sullivan | Getty Images

Elizabeth Holmes failed to pay back more than $25 million to creditors at her former company Theranos as she tries to extend her 11-year sentence, according to a lawsuit.

Theranos ABC, a corporation formed on behalf of its creditors, alleges in a lawsuit filed in the Superior Court of California in Santa Clara County that “Holmes failed to make payment on any of the promissory notes.”

The lawsuit was filed in December 2022 but only came to light on Friday when Holmes appeared in court.

According to the breach of contract lawsuit, Holmes executed three promissory notes while she was CEO of the failed blood testing company. According to the lawsuit, the promissory notes read as follows:

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

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

December 2013 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 pursuant to the Promissory Note.”

Theranos ABC’s attorneys did not immediately respond to a request for comment.

Two of the promissory note payments were due for the first time in 2016 and the third in 2018. In July 2016, the board of directors of Theranos, which then included Holmes, former Secretary of Defense James Mattis, attorney David Boies, and former Bechtel Group CEO Riley, amended terms to include Bechtel and former Wells Fargo CEO Richard Kovacevich to extend the bonds by 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 that her report date next month in prison be postponed while she appeals her conviction. A man leading the lawsuit approached Holmes at her lawyers’ table in the courtroom. The man, who was becoming increasingly upset, was taken away by marshals. It could not be immediately confirmed whether he was a process officer attempting to serve Holmes with the complaint.

In January 2022, a jury found Holmes guilty on four counts of wire fraud and conspiracy. Holmes was ordered to turn herself in to begin her sentence on April 27, 2023. Her attorneys have signaled 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 gave several reasons why she poses no risk of escaping, including her young children, and that she has been out on bail without escaping for more than a year.

However, the government pointed to a one-way ticket that Holmes and her partner Billy Evans booked to Puerto Vallarta, Mexico days after their conviction.

Holmes is also at odds with prosecutors over how much compensation she should pay. Prosecutors want her to pay nearly $900 million, while Holmes argues the government failed to prove investors relied on her allegations.

US District Court Judge Edward Davila plans to rule on both applications in early April.

Holmes founded Theranos in 2003 after dropping out of Stanford with a promise to revolutionize the healthcare industry. The company shut down in 2016 after a series of failed regulatory inspections and articles by then-Wall Street Journal reporter John Carreyrou.

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