Former Theranos President Ramesh Balwani Seeking to Rescind $900 Million Government Restitution Order
- In a memo filed on Feb. 10, the Indian American, who is the ex-lover of Theranos founder and CEO Elizabeth Holmes, said the restitution order is “beyond anyone's ability to pay, and is “plagued” by several errors.
Convicted former Theranos President Ramesh “Sunny” Balwani is fighting the $900 million restitution order the government is seeking for investors, legal news service Law360 has reported. In a memo filed on Feb. 10, the Indian American, who is the ex-lover of Theranos founder and CEO Elizabeth Holmes, told a California federal judge that the restitution order is “beyond anyone’s ability to pay.” He said the calculation is “plagued” by several errors.
“The government has failed to prove that the investors’ losses as of the date of sentencing were directly and proximately caused by Mr. Balwani rather than by decisions made after Mr. Balwani left the company,” read the memo. “In addition, the government has not established another statutory requirement regarding the amount of restitution: the property’s value on the date of the damage or loss.”
The memo notes that Balwani left Theranos in May 2016 and “no longer had any influence over the company’s governance or operational decisions.” Noting that “two years passed before Theranos dissolved, and more than six years passed before Mr. Balwani was sentenced,” the memo states that “the diminution in the value of investors’ Theranos stock was not attributable to Mr. Balwani.”
According to the Department of Justice press release, Balwani, who was employed at Theranos from September 2009 through July 2016, held positions of a board member, chief operating officer and president.
He was found guilty last July of 10 counts of wire fraud and two counts of conspiracy to commit wire fraud. He was sentenced in December by U.S. District Judge Edward Davila to almost 13 years in prison. Judge Davila rejected Balwani’s arguments that he deserves only probation for his crimes. The judge set a surrender date for March 15.
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 January, Balwani asked the court to let him stay out of prison as he appeals his sentence for defrauding investors and patients, arguing he does not pose a flight risk or a danger to the community. Federal prosecutors strongly opposed the request, pointing to his family abroad as a means and motive for him to flee.
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.
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