Former President of Theranos Ramesh ‘Sunny’ Balwani Found Guilty of Defrauding the Company’s Investors and Patients
- The 57-year-old Indian American faces similar conviction as Elizabeth Holmes, his co-conspirator, former girlfriend, and founder and CEO of the blood-testing startup.
Ramesh “Sunny” Balwani, 57, the former president of Theranos, and ex-boyfriend of founder and CEO Elizabeth Holmes, was found guilty today (July 7) of 10 counts of wire fraud and two counts of conspiracy to commit wire fraud. He was convicted by a jury of five men and seven women who deliberated for nearly five days.
According to The New York Times, “the verdict was more severe than that of his co-conspirator,” Holmes, who was found guilty this January on four charges of defrauding investors for her role in building the blood-testing startup into a $9 billion company that collapsed in scandal.
She remains free on bond, and her sentencing has been scheduled for September. She faces up to 20 years in prison, a $250,000 fine, and the requirement to pay victims restitution for each count on which she was convicted. “The dual guilty verdicts are a rare instance of the Silicon Valley hype machine leading to possible prison time,” The Times noted.
One of Balwani’s lawyers, Jeffrey Coopersmith, said in a statement that his team was “obviously disappointed” by the verdicts and that his client “would consider all of his options, including appeal.”
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 health care costs.
While Holmes was the face of the company, Balwani’s influence was felt in all areas of the company, and was “instrumental in building a billion-dollar house of cards that duped both investors and patients,” as reported by Axios.
In both the trials, text messages between Holmes and Balwani played a crucial role in establishing their relationship as well as their role in the fraud. Both the attorneys tried to pin the blame for the company’s failure on the other. However, one big difference between the trials was that Balwani didn’t testify in his own defense,” the Axios report added.
The Indian American’s trial lasted for three months. During that period, the court heard from several witnesses who worked directly with him. One of them was Patrick Mendenhall, who, according to The New York Times, “dealt directly with Balwani while making an investment in Theranos, outlined the promises that turned out to be misleading or false.”
Another testimony was from Brian Grossman, an investor at the hedge fund PFM Health Sciences, who was also a witness in Holmes’s trial. The Times said he testified that “Balwani had provided his team with financial projections that far overstated Theranos’s projected revenue.”
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.
Balwani, a technology entrepreneur, had already made millions before meeting Holmes and becoming involved in Theranos, as documented in Hulu’s “The Dropout,” which chronicles the rise and fall of Holmes. For the acquisition of CommerceBid, Sunny Balwani received $40 million. He helped launch the software development company CommerceBid in 1998, which was created to help organizations buy and sell commodities over the Internet, which was then gaining popularity. CommerceOne, a business-to-business e-commerce company that used auctions to connect companies with their suppliers, had its first trading day after going public in July 1999.
When he met Holmes, Bаlwаni, 37, was mаrried. After selling his shаres, he returned to school, аnd enrolled аt the University of Cаliforniа, Berkeley, During а 2002 Beijing trip as part of Stanford University’s Mаndаrin progrаm, he met 18-yeаr-old Holmes while а student. He аnd Holmes, who were reportedly mаrried аt the time, didn’t stаrt dаting until 2003 when he eаrned his MBA аnd she dropped out to pursue Therаnos. In 2005, the couple shаred а home.
Holmes is expected to be sentenced in September, and Balwani in November.