- Through their blood-testing start-up, the Indian American and his ex-girlfriend, founder and CEO Elizabeth Holmes, jeopardized patient health and defrauded investors of millions.
Ramesh “Sunny” Balwani, the former president of Palo Alto, California-based Theranos Inc., and ex-boyfriend of founder and CEO Elizabeth Holmes, was sentenced today, Dec. 7, to nearly 13 years in prison. Through the blood-testing start-up, Balwani and Holmes “risked patients by misrepresenting the accuracy of the company’s blood analysis technology that defrauded investors of millions of dollars,” according to a statement from the U.S. Attorney’s Office, Northern District of California.
In addition to the 155-month prison term, U.S. District Judge Davila sentenced the Indian American to three years of supervision following release from prison, the statement said, adding that “a hearing to determine the amount of restitution to be paid by Balwani is to be scheduled in the future.” He was ordered to surrender on March 15, 2023, to begin serving his prison sentence.
The sentencing brings to an end the saga of the Silicon Valley company. Last month, Holmes was sentenced to more than 11 years in prison after being found guilty on four counts of misleading investors about the company’s technology and business.
During today’s sentencing, U.S. Attorney Stephanie M. Hinds told the court that Balwani, “in a desire to become a Silicon Valley titan, valued business success and personal wealth far more than patient safety. He chose deceit over candor with patients in need of medical care, and he treated his investors no better. Today’s sentence should serve as a lesson to anyone considering fraud in their own push for success.”
Holmes and Balwani were charged in 2018. According to the indictment unsealed on June 15, 2018, the pair had engaged in a multi-million dollar scheme to defraud investors and a separate scheme to defraud doctors and patients, and both schemes entailed promotion.
Holmes had founded Theranos in 2003 as a 19-year-old college dropout and was hailed and celebrated as a Silicon Valley whiz-kid. The company was aiming to revolutionize medical laboratory testing through allegedly innovative methods for drawing blood, testing blood, and interpreting the resulting patient data to improve outcomes and lower healthcare costs.
Balwani met Holmes in 2002 during a Beijing trip as part of Stanford University’s Mаndаrin program. They didn’t start dаting until 2003 when he earned his MBA аnd she dropped out to pursue Therаnos. In 2005, the couple shаred а home.
According to the Department of Justice press release, Balwani, who was employed from September 2009 through July 2016 at Theranos, held positions of a board member, chief operating officer and president.
However, during her testimony, Holmes accused Balwani of emotionally and sexually abusing her, which apparently compromised her judgment during the time of the alleged crimes. Holmes made the accusations during her much-anticipated testimony on Nov. 29, 2021. in an attempt to refute accusations that she lied about a flawed blood-testing technology, which she had touted as a breakthrough. She blamed Balwani for allegedly exploiting, using and misleading her.
Citing trial evidence the DoJ said both Balwani and Holmes falsely claimed that the revolutionary blood analyzer developed by Theranos was faster, cheaper, and more accurate than the conventional methods. However, both of them knew that the analyzer performed only a few basic tests and was slower than existing devices. While “they repeatedly resorted to using conventional machines to obtain the blood test results that the Theranos analyzer was supposed to perform,” they led investors and the public to the opposite, the DoJ said.
Moreover, despite having zero revenue in 2012 and 2013, they represented to investors in late 2013 and 2014 that Theranos had hundreds of millions in revenue from a combination of pharmaceutical companies and the military. Balwani conspired to induce Walgreens and Safeway to invest in Theranos based on false pharmaceutical company endorsements and fantastical revenue projections.
Like Holmes, Balwani enjoyed the benefits of serving as a Silicon Valley titan He amassed “spectacular personal wealth” through the fraud, the DoJ said, adding that he“owned nearly 30 million shares of Theranos – over 6% of the company – which were worth hundreds of millions of dollars at the peak of the fraud.”