Sunny Balwani: Former Theranos executive given 13 years in prison for fraud

Theranos chiefs peddled false claims the company had developed a device that could scan for hundreds of diseases with a few drops of blood

Former Theranos executive Ramesh 'Sunny' Balwani. Bloomberg
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Former Theranos executive Ramesh "Sunny" Balwani was sentenced to nearly 13 years in prison in the US on Wednesday after a July conviction for fraud and conspiracy.

His former partner, chief executive and founder of Theranos, Elizabeth Holmes, received more than 11 years in prison for her role in cheating investors out of millions through peddling the company’s bogus blood-testing technology.

Their convictions and sentencing stem from years of false claims by the company that it had developed a device that could scan for hundreds of diseases and other problems with a few drops of blood.

The case cast a light on Silicon Valley’s dark side, exposing how its culture of hype and boundless ambition could veer into lies.

Holmes could have received up to 20 years in prison — a penalty that US District Judge Edward Davila could also have imposed on Balwani, who spent six years as Theranos’s chief operating officer while romantically involved with Holmes until a bitter split in 2016.

While on the witness box in her trial, also in San Jose, California, Holmes accused Balwani, 57, of manipulating her through years of emotional and sexual abuse. Balwani’s lawyer has denied the allegations.

The two trials had somewhat different outcomes.

Unlike Balwani, Holmes was acquitted on several charges of defrauding and conspiring against people who paid for Theranos blood tests that produced misleading results and could have directed patients to the wrong treatment.

The jury in Holmes’s trial was also deadlocked on three charges.

Theranos founder Elizabeth Holmes found guilty in fraud trial — video

Theranos founder Elizabeth Holmes found guilty in fraud trial

Theranos founder Elizabeth Holmes found guilty in fraud trial

Balwani was convicted on all 12 felony counts and his lawyers contend he deserves a far more lenient sentence of four to 10 months in prison, preferably in home confinement.

Prosecutors for the Justice Department were seeking 15 years.

Federal prosecutors also want the judge to order Balwani to pay $804 million in restitution to defrauded investors — the same amount sought from Holmes.

The judge deferred a decision on restitution during Holmes’s November 18 sentencing until an unspecified future date.

In court documents, Balwani’s lawyers portrayed him as a hardworking immigrant who moved from India to the US in the 1980s to become the first member of his family to attend college.

Later, in Silicon Valley, he first worked as a computer programmer for Microsoft before founding an online start-up that he sold for millions of dollars during the dot-com boom.

Balwani and Holmes met about the same time as she dropped out of Stanford University in 2003 to start Theranos.

Lawyers for Balwani said he eventually invested about $5 million in the start-up that eventually became worth about $500 million on paper — a fraction of Holmes’s one-time fortune of $4.5 billion.

That wealth evaporated after Theranos began to unravel in 2015 amid revelations that its blood-testing technology never worked as Holmes had boasted in glowing magazine articles that likened her to Silicon Valley visionaries such as Apple co-founder Steve Jobs.

Before Theranos’s downfall, Holmes teamed up with Balwani to raise nearly $1 billion from investors that included software mogul Larry Ellison and media magnate Rupert Murdoch.

Echoing similar claims made by Holmes’s lawyers before her sentencing, Balwani’s lawyers said he has been adequately punished by the intense media coverage of Theranos, which has been the subject of a book, documentary and award-winning TV series.

Balwani “has lost his career, his reputation and his ability to meaningfully work again”, his lawyers wrote.

AP contributed to this report

Updated: December 08, 2022, 7:02 AM