AP

Former Theranos exec Ramesh Balwani convicted of fraud

Jul 7, 2022, 12:27 PM | Updated: Jul 11, 2022, 9:29 pm

Ramesh "Sunny" Balwani, right, the former lover and business partner of Theranos CEO Elizabeth Holm...

Ramesh "Sunny" Balwani, right, the former lover and business partner of Theranos CEO Elizabeth Holmes, leaves a San Jose, Calif., federal courthouse with his lawyers Thursday, July 7, 2022, after a jury convicted him on 12 counts of duping investors and patients while running a blood-testing startup that was once a Silicon Valley sensation before being exposed as a sham. (AP Photo/Michael Liedtke)

(AP Photo/Michael Liedtke)

SAN JOSE, Calif. (AP) — 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 in a San Jose, California, court, blinking frequently but rarely looking at the seven women and five men who convicted him.

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 and emotionally abusing her while the two were romantically involved. An attorney for Balwani has vehemently denied those charges.

Both Holmes, 38, and Balwani, 57, face up to 20 years in prison.

After the verdicts, U.S. District Judge Edward Davila raised Balwani’s bail to $750,000 from $500,000 and set Nov. 15 as his sentencing date. Holmes, who is free on $500,000 bail, is scheduled to be sentenced Sept. 26.

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.”

“We are gratified by the jury’s hard work and attentiveness to the evidence presented. We appreciate the verdict and look forward to the sentencing proceedings,” U.S. Attorney Stephanie Hinds said outside the courthouse.

Balwani didn’t respond to requests for comment as he left court with his legal team.

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 stood quietly, heads bowed.

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.

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.

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. That crucial detail may have influenced the jury to convict him of defrauding patients while another jury acquitted Holmes on the same charges.

Balwani also prepared many of the projections about Theranos’ future revenue that helped the company raise money from investors Those forecasts proved to be grossly exaggerated.

Unlike Holmes, who spent seven days on the witness stand during her trial, Balwani didn’t testify in his own defense. After Holmes’ trial, jurors who were interviewed by the media said they found her to be likeable if not entirely credible.

“The reason he didn’t testify is probably because he knows he doesn’t have Elizabeth’s charisma,” said Jill Huntley Taylor, a longtime jury consultant who also assists with trial strategy.

Balwani’s decision not to tell his side of the story left jurors to make their decision based solely on the evidence, which included testimony from witnesses who depicted him as an often abrasive executive.

“Just because the jurors didn’t hear from Balwani didn’t mean they couldn’t form opinions of him,” Huntley Taylor said.

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.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

American Airlines put an unspecified number of employees on leave for their involvement in an incid...

Associated Press

American Airlines CEO calls removal of Black passengers from Phoenix flight ‘unacceptable’

American Airlines put an unspecified number of employees on leave for their involvement in an incident in which several Black passengers were removed from a flight in Phoenix.

4 days ago

FILE - Crystal Baziel holds the Pan-African flag Monday, June 19, 2023, during Reedy Chapel A.M.E C...

Associated Press

The beginner’s guide to celebrating Juneteenth

For more than one-and-a-half centuries, the Juneteenth holiday has been sacred to many Black communities. It marks the day in 1865 enslaved people in Galveston, Texas found out they had been freed — after the end of the Civil War, and two years after President Abraham Lincoln’s Emancipation Proclamation. Since it was designated a federal […]

5 days ago

A Boeing 737 Max suffered damage to parts of the plane's structure after it went into a “Dutch ro...

Associated Press

Plane that did ‘Dutch roll’ on flight from Phoenix suffered structural damage, investigators say

A Boeing 737 Max suffered damage to parts of the plane's structure after it went into a “Dutch roll” during a flight from Phoenix last month.

10 days ago

This photo provided by Randy Shannon shows Mooney Falls on the Havasupai reservation outside the vi...

Associated Press

Dozens report illness after trips to waterfalls near Grand Canyon

Dozens of hikers say they fell ill during trips to a popular Arizona tourist destination that features towering blue-green waterfalls deep in a gorge neighboring Grand Canyon National Park.

11 days ago

Mugshot of Rudy Giuliani, who was processed Monday, June 10, 2024, in the Arizona fake electors cas...

Associated Press

Rudy Giuliani posts $10K cash bond after being processed in Arizona fake electors case

Rudy Giuliani, a former New York City mayor and Donald Trump attorney, was processed Monday in the Arizona fake electors case.

13 days ago

FILE - White House former chief of staff Mark Meadows speaks with reporters at the White House, Wed...

Associated Press

Former Trump chief of staff Mark Meadows pleads not guilty in Arizona fake elector case

Former Donald Trump presidential chief of staff Mark Meadows and Trump 2020 Election Day operations director Michael Roman pleaded not guilty Friday in Phoenix to nine felony charges for their roles in an effort to overturn Trump's Arizona election loss to Joe Biden.

17 days ago

Sponsored Articles

...

Midwestern University

Midwestern University Clinic visits boost student training & community health

Going to a Midwestern University Clinic can help make you feel good in more ways than one.

...

Midwestern University

Midwestern University Clinics: transforming health care in the valley

Midwestern University, long a fixture of comprehensive health care education in the West Valley, is also a recognized leader in community health care.

...

DISC Desert Institute for Spine Care

Sciatica pain is treatable but surgery may be required

Sciatica pain is one of the most common ailments a person can face, and if not taken seriously, it could become one of the most harmful.

Former Theranos exec Ramesh Balwani convicted of fraud