A jury on Thursday convicted former Theranos executive Ramesh “Sunny” Balwani of collaborating with disgraced Theranos CEO Elizabeth Holmes in a massive fraud involving the blood-testing company that once enthralled Silicon Valley.
The 12 jurors found Balwani guilty on all 12 felony counts of defrauding both Theranos investors and the patients who relied on wildly unreliable blood tests that could have jeopardized their health.
Balwani sat impassively as the verdicts were read, blinking frequently.
The outcome puts Balwani and Holmes in similar situations. Holmes was convicted on four counts of investor fraud and conspiracy earlier this year. During that trial, Holmes tearfully accused Balwani of sexually emotionally abusing her while they were lovers. An attorney for Balwani has vehemently denied those charges.
Ramesh "Sunny" Balwani, right, the former lover and business partner of Theranos CEO Elizabeth Holmes, walks into federal court in San Jose, Calif., Friday, June 24, 2022. Balwani was found guilty in Theranos blood-testing fraud case, Thursday, July 7. .(AP Photo/Michael Liedtke, File)
Both Holmes, 38, and Balwani, 57, face up to 20 years in prison.
Holmes is scheduled to be sentenced in late September. The date of Balwani’s sentencing is expected to be set in the coming days.
The dual convictions represent a resounding victory for federal prosecutors, who seized on the Theranos case as a rare opportunity to hold ambitious entrepreneurs accountable for engaging in technological hyperbole while pursuing fame and fortune. In the process, they hoped to discourage the practice of making bold and unproven promises about still-nascent products -- a startup strategy known as "fake it until you make it.”
After the verdicts were read and the jury was dismissed, Balwani walked over to his two brothers who were sitting behind him for what appeared to be a solemn discussion. The three sat quietly, heads bowed.
After the verdict, Judge Edward Davila raised Balwani’s bail from $500,000 to $750,000 and set his sentencing for November 15. Holmes, who is currently free after posting bail of $500,000, is scheduled for sentencing on September 26.
While Holmes insinuated during her trial that Balwani manipulated her into making poor choices, Balwani’s lawyers explicitly sought to shift all the blame for any misconduct squarely on Holmes.
Elizabeth Holmes walks into federal court in San Jose, Calif., Monday, Jan. 3, 2022. (AP Photo/Nic Coury)
As part of Balwani’s defense, the lawyers pointed out that Holmes was not only CEO, but also a Silicon Valley star who persuaded investors to pour nearly $1 billion into Theranos. Holmes boasted that her company had found a way to scan for hundreds of potential diseases with a device called the Edison that could test just a few drops of blood taken with a finger prick. Such technology could potentially revolutionize healthcare.
But it turned out that the Edison never worked properly, providing faulty test results that Theranos conducted as part of a deal to set up mini labs in Walgreen’s pharmacies. The flaws in Theranos’ vaunted technology prompted Holmes and Balwani to shift their testing to conventional machines made by other vendors and while drawing vials of blood from patients' veins — a far cry from Holmes' promises.
(Photo: Business Wire)
After committing about $15 million of his own money to bolster Theranos and then becoming the company’s chief operating officer in 2010, Balwani eventually oversaw the blood-testing lab that was delivering the inaccurate results and supervised the Walgreen’s deal.
Unlike Holmes, who spent seven days on the witness stand during her trial, Balwani didn’t testify in his own defense.
Balwani’s defense mirrored Holmes’s in one key aspect: Both depicted the pair as tireless workers who believed so deeply in Theranos’ technology that they never sold their respective stakes in the Palo Alto, California, company. At one point in 2014, Holmes’ fortune was estimated at $4.5 billion while Balwani’s Theranos holdings were valued at $500 million.
But everything began to unravel in late 2015 after a series of explosive articles in The Wall Street Journal exposed rampant problems with Theranos’ technology. By May 2016, Holmes had dumped Balwani as her business and romantic partner. Holmes is now the mother of an infant son fathered by her current partner, Billy Evans, who was by her side through most of her trial.