Former Theranos COO is guilty of federal fraud: Former Theranos COO and ex-boyfriend of company founder Elizabeth Holmes, Ramesh “Sunny” Balwani, was found guilty of cheating investors and patients.
Following a protracted trial that began in March with opening remarks, the jury’s deliberations lasted for four full days. All 12 allegations against Balwani, including 10 counts of federal wire fraud and two counts of conspiracy to conduct wire fraud, were found to be true by a jury consisting of five men and seven women.
A different jury in Holmes’ trial found her not guilty of deceiving patients, but it was unable to reach a majority decision on three counts of scamming investors, leading to her acquittal. On four counts, she was found guilty of defrauding investors.
For the past four years, Balwani, the former president and COO of the failed blood-testing firm, has been accused of scamming investors and patients. Holmes’ legal team stated in court records that she planned to bring claims about their relationship as part of her defense, which led to their trials being severance.
During the reading of Balwani’s final sentence, he appeared to be unmoved. A small group of people who were in the courtroom to support him gathered around him afterward. Approximately six months after the conclusion of Holmes’ trial, a decision has been reached.
By thanking the jurors outside the courthouse on Thursday, US Attorney Stephanie Hinds said they had “dutifully navigated through the complicated problems presented by this case.”
Sentencing proceedings are expected to begin soon, Hinds said. “We welcome the verdict and look forward to it.”
Balwani’s lawyer, Jeffrey Coopersmith of Orrick, Herrington & Sutcliffe, said in a statement to CNN Business that: “The findings were certainly disappointing to us. Including an appeal, Mr. Balwani has a number of options available to him “Final chapter for a Silicon Valley startup and a founder once hailed as an entrepreneur’s dream come true: Balwani’s guilty verdict marks the end of an unusual criminal fraud case against two Silicon Valley startup executives.
A history of the technology business and lecturer at the University of Washington told CNN Business that Balwani serves as a reminder that she, like everyone else, didn’t achieve it alone. A considerable role in the company’s management was still played by him.
After developing a phobia of needles, Holmes founded Theranos at the age of 19 in an effort to develop a cheaper, more efficient alternative to standard blood testing. To screen for a wide range of illnesses, including cancer and diabetes, the business claimed to have created equipment that required only a few drops of blood. Finally, Theranos raised $945 million from investors including Rupert Murdoch and Walmart’s Walton family, who are both well-known in the media industry. It has also formed alliances with some of the most well-known retailers in the country.
After a Wall Street Journal investigation into the startup in 2015 uncovered flaws in its testing techniques and technological skills, everything came crashing down.
San Jose, California courthouse where Holmes was convicted was used for Balwani’s trial. Judge Edward Davila presided over his case, which was repeatedly postponed because of the ongoing Holmes trial and then an increase in Covid-19.
The government brought more than two dozen witnesses in an attempt to persuade jurors that Balwani lied and mislead investors and patients to obtain funding for Theranos in order to prove its case against him. On a similar level to that of Holmes’ case, the government attempted to disentangle all of the alleged fraud for jurors, including concealing the usage of third-party-made machinery and exaggerating financial statements.
Instead of a single witness for the prosecution, the defense called on the testimony of two people. During the course of the trial, it was stressed that Balwani had acted honestly and had confidence in the technology of the organization. It also argued that prosecutors cherry-picked evidence to make their case and questioned whether the government had enough evidence for the jury to find Balwani guilty..
He faces up to 20 years in prison on each count of wire fraud or conspiracy as well as a fine of $250,000 plus restitution.
Holmes, 38, is expected to be sentenced at the end of September, according to court records. At the end of November, a verdict will be handed down in the case of Balwani.
Harry Potter’s path to Holmes and Theranos’ path to success.
O’Mara said Balwani is “more symbolic of the Valley in terms of his career” than Holmes will be in the long-term memory of the narrative of Theranos.
When Balwani and Holmes first met in the summer of 2002, it was the first time they had ever met. They met on a summer language-learning programme in Beijing. In contrast to Holmes, Balwani had a successful career in the software sector and as an entrepreneur, about 20 years earlier than Holmes did.
Balwani, a native of South Asia, came to the United States in 1986 to study at the University of Texas at Austin. Then he moved to Silicon Valley, where he worked for big businesses like Lotus and Microsoft after graduating from the university. He then went on to develop and sell an e-commerce business. In 2002, he returned to school to earn an MBA from the University of Phoenix.
During Holmes’ trial, she and the prosecution witness formed a bond. They remained in touch, and their friendship eventually blossomed into something more. In 2005, a year after Holmes dropped out of Stanford to focus on Theranos full-time, the two moved in together.
When Balwani signed a $10 million loan guarantee for Theranos in 2009, he became a full-fledged employee of the company. According to Balwani’s argument, the board of directors of Theranos recommended that he take on the roles of COO and president. However, investors, employees, and business partners were mostly kept in the dark about their relationship.
For their efforts, Holmes and Balwani led Theranos to an important relationship with Walgreens, which resulted in a $9 billion valuation. One of the first women to start her own billion-dollar company, Holmes was featured on many magazine covers and lauded as the unusual female billionaire.
When the Journal reported in 2015 that only a dozen or so tests utilizing Theranos’ unique blood testing technology had been completed, it raised questions about the company’s reliability. According to a report in the New York Times, Theranos relied on blood-testing devices built by standard blood-testing companies rather than its own patented technology.
In May of this year, Balwani, who had been in charge of the lab that handled patient samples, left the company. In addition, their personal connection was terminated at this time. ) More than a year’s worth of blood test results were canceled by Theranos.
As part of a settlement with the US Securities and Exchange Commission in 2018, Holmes and Theranos agreed to “massive fraud” charges but did not accept or reject the claims. Instead of pleading his or her case, Balwani has decided to fight the charges. According to a statement released at the time, Coopersmith “accurately represented Theranos to investors to the best of his ability” while also representing him in his criminal prosecution.
Soon after, Theranos went out of business.
Everything is done together as a team.
Despite the fact that their trials were held separately, each played an important role in the legal procedures of the other.
The prosecution believes that Leach and Holmes “were partners in everything, including their crimes,” as US assistant attorney Robert Leach told jurors during the prosecution’s opening arguments in Balwani’s trial.
As an important element of Theranos and a trusted advisor to Holmes, Balwani played a somewhat minor role in the company’s operations. Additionally, he was responsible for managing Theranos’ retail collaboration with Walgreens and monitoring the lab for its patients. He also communicated directly with some investors in order to arrange business partnerships.
Holmes indicated that Balwani exercised even more control than she did at her own company during her criminal prosecution. She took the stand in her own defense and said that Balwani had abused her for a decade. Restrictive lifestyle and image were prescribed by Balwani in order to succeed in business, she alleged. She said in evidence that he sometimes compelled her to engage in intercourse with him. In response to the charges, Balwani’s counsel has categorically refuted them.
Even while Holmes didn’t go so far as to say Balwani told her to lie, To this day, she still doesn’t grasp how much of an impact he had on her.
Jurors were able to observe the evidence and witness testimony in action during the trial of James Holmes and Mark MacDougall believes both sides were likely to benefit from this. “Each party in Sunny’s trial would have made revisions based on the outcome of the Holmes case,” he added.
In spite of the fact that Balwani chose not to testify, his defense team’s plan included putting the blame squarely on Holmes. Jurors were reminded by the defense that he was a fan of Holmes and Theranos, like many other prominent investors, business partners, and workers.
Channing Robertson, a chemical engineering professor at Stanford University, served as the company’s inaugural board member; James Mattis, a former Defense Secretary, and George Shultz, a former Secretary of State, also served on the board.
During closing arguments, Coopersmith stated, “That was the board at Theranos that the investors were justifiably impressed with, as was Mr. Balwani no doubt.”
The government’s testimony reflected the high standards of Theranos’ funders. Theranos investors Chris Lucas, Lisa Peterson, and Daniel Mosley, as well as former US Education Secretary Betsy DeVos’ billionaire family’s lawyer Henry Kissinger, have all testified in the two trials, as have a number of other prominent lawyers who were introduced to Theranos through their longtime client and longtime client Henry Kissinger, the former Secretary of State who once served on the board of directors. (Mosley introduced Holmes and Theranos to a number of his clients, including the DeVos family.)
The charm, passion, vision, and purpose of changing diagnostic testing were all things Elizabeth was able to do, according to Coopersmith. “And he got into that vision.”
Attorneys for Balwani underlined that jurors should be wary of the prosecution’s case because of a missing database. Prosecutors were unable to gain access to the database before it was wiped clean.
A key part of your considerations is to focus on the evidence in front of you and not speculate about things you haven’t seen, said assistant US attorney John Bostic in the prosecution’s reply to the defense’s closing statements just before the case was sent to juries.