Elizabeth Holmes' former partner and COO Sunny gets 13 years in Theranos case
SAN JOSE, CALIFORNIA: Ramesh "Sunny" Balwani, a former COO at Theranos, was sentenced to nearly 13 years in prison on Wednesday, December 7 for his involvement in the company's blood-testing scam. His sentence came less than three weeks after Elizabeth Holmes, the company's founder, and CEO, was given more than 11 years in prison for her involvement in the fraud.
Balwani was found guilty of fraud and conspiracy in July in connection with the company's fake medical technology that endangered patients and misled investors. The Theranos fraud was centered on the company's bogus claims that it had created a device that could screen for hundreds of diseases and other possible issues with just a few drops of blood drawn by a finger prick. Despite warnings that the blood tests were inaccurate after years of promoting the technology, Holmes and Balwani continued to raise money from investors, including billionaires like software tycoon Larry Ellison and media tycoon Rupert Murdoch. US District Judge Edward Davila stated that the financial statements prepared by Balwani "weren't just projections, they were lies" and "a true flight from honest business practices." This case shed light on Silicon Valley's nightmarish side, showing how its hype-based culture and boundless ambition might degenerate into lies.
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The verdicts in the trials of Holmes and Balwani were somewhat different. In contrast to Balwani, Holmes was found not guilty of many charges of deceiving and conspiring against persons who paid for Theranos blood tests that gave inaccurate findings and might have misdirected patients' care. In Holmes' trial, there was a deadlock on three of the charges.
Balwani was found guilty on all 12 felony counts, but his attorneys argued for a sentence of only four to 10 months in prison. Justice Department prosecutors requested a 15-year sentence, while a probation assessment recommended only nine years.
Federal prosecutors also want the judge to order Balwani to pay $804 million in restitution to investors who were deceived—the same amount asked of Holmes—to investors who were duped. Davila delayed a judgment on restitution until a later date, just as he did when he sentenced Holmes on November 18—when she was given 11 1/4 years in prison.
In court pleadings, Balwani's attorneys portrayed him as a diligent immigrant who came to the United States from India in the '80s. He earned an information systems degree from the University of Texas in 1990. Subsequently, he relocated to Silicon Valley, where he first worked for Microsoft as a computer programmer before starting an online firm that he later sold for millions of dollars during the dot-com boom of the 1990s.
Holmes and Balwani first became acquainted around the time she left Stanford University in 2003 to establish Theranos. He grew fascinated by her and her efforts to transform healthcare. Balwani invested roughly $5 million in a Theranos stock that was eventually valued at around $500 million on paper, according to Balwani's attorneys.
In a memo to the judge, Balwani's attorneys stated, "Mr. Balwani is not the same as Elizabeth Holmes. He actually invested millions of dollars of his own money; he never sought fame or recognition, and he has a long history of quietly giving to those less fortunate." Furthermore, Balwani's attorneys asserted, Holmes "was dramatically more culpable" for the Theranos fraud.
Balwani was portrayed by federal prosecutors as a vicious, power-hungry partner in crimes that defrauded investors and endangered those who obtained subpar results. Balwani worked with Walgreens to develop a collaboration that would make blood testing accessible.
"Balwani presented a fake story about Theranos' technology and financial stability day after day in meeting after meeting. Balwani maintained this façade of accomplishments, after making the calculated decision that honesty would destroy Theranos," prosecutors stated in their brief to the judge.