Rupert Murdoch Owed $125M Over Theranos Fraud (But Isn’t Likely Getting That Back)
Elizabeth Holmes may owe Rupert Murdoch $125 million, but he may not have much luck getting much of his money back.
A federal judge ordered Holmes on Tuesday to pay $452 million to investors she duped to build her hoax blood-testing business. Among the investors she bilked was Murdoch, who was one of Theranos’ largest investors. Holmes, however, has indicated she’s essentially broke.
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Murdoch bought roughly 7.3 million shares of Theranos at $17 a share, according to court filings.
In a ruling ordering restitution, U.S. District Judge Edward Davila found that investors’ losses are tied to Holmes’ fraud. “For each of these investors, the Court identified specific reliable evidence indicating that they were induced to invest in Theranos by Defendants’ misrepresentations as part of the fraud conspiracy,” he wrote.
Natalie Ravitz, chief of staff to Murdoch in 2014 to 2015 and manager of his personal investments, testified to the Securities and Exchange Commission that Holmes personally provided binders containing financial materials about Theranos to Murdoch. She also stated that knowledge that blood tests were not actually being perfomed on Theranos’ proprietary devices “would have changed how we thought about certainly the financial aspects of it, if there wasn’t an actual piece of technology that they had developed.”
Murdoch told The Wall Street Journal, which he owns, in November that he should’ve vetted the company better.
“Of course it was fraud,” he said. “But I only have myself to blame for not asking a lot more questions. One of a bunch of old men taken in by a seemingly great young woman! Total embarrassment.”
Holmes will have to start making restitution payments after her release. If she chooses, a percentage of her wages in prison will be applied to her debt.
“Realistically, however, the chance of full recovery is very low,” states the Department of Justice in guidelines about the restitution process.
The restitution order will act as a lien against all property owned by Holmes. It’s enforceable for 20 years plus the time of incarceration. Davila in November sentenced her to 11 years in prison for a conviction on four counts of fraud and conspiracy. Holmes will soon have to surrender herself after an appeals court on Tuesday rejected her bid to remain free while the appeal of her conviction is being considered.
The media mogul wasn’t the only high-profile person to invest in Theranos. Oracle cofounder Larry Ellison, former Secretary of Education Betsy DeVos and venture capitalist Tim Draper sunk millions of dollars into the company.
Holmes is jointly liable for the restitution with her former business partner Ramesh “Sunny” Balwani, who was also convicted for fraud. He’s similarly told the court he has little money left after paying for legal fees.
Holmes married William Evans, heir to a chain of hotels in California, after Theranos collapsed.
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