Ramesh Sunny Balwani gets prison time for Theranos fraud
December 8, 2022 04:23 PM
A judge on Thursday sentenced a top aide and ex-boyfriend of fallen Theranos founder Elizabeth Holmes to prison for duping people into trusting the failed blood testing startup.
US District Court Judge Edward Davila sentenced Ramesh "Sunny" Balwani to nearly 13 years in prison, then 3 years of supervised release for his role in what prosecutors argued was a massive fraud perpetuated on Theranos investors and patients.
Balwani is supposed to surrender to be taken into custody on March 15.
Fallen US biotech star Holmes, whose fraud trial was separate from that of Balwani, has asked an appeals court to overturn her conviction and a resulting sentence of more than 11 years in prison.
Holmes's appeal said she is challenging the prison sentence handed down in November, as well as "any and all adverse rulings incorporated in, antecedent to, or ancillary to the judgment."
She was convicted on four felony fraud counts in January for persuading investors that she had developed a revolutionary medical device before the company flamed out after an investigation by The Wall Street Journal.
Jurors found Balwani guilty on all 12 fraud counts filed by federal prosecutors, according to the court.
Holmes and Balwani are rare examples of tech executives facing charges over a young company not living up to its hype, in a sector littered with the carcasses of failed startups that once promised untold riches.
Holmes, who is pregnant, will not have to surrender until April of next year, as per an order by Davila, who presided over both trials in a courtroom in San Jose, California.
The 38-year-old became a star of Silicon Valley when she said her start-up was perfecting an easy-to-use test kit that could carry out a wide range of medical diagnostics with just a few drops of blood.
During her trial, Holmes described Balwani as a controlling force at Theranos.
Her trial shined a spotlight on the blurred line between the hustle that characterizes the industry and outright criminal dishonesty.
US prosecutor Robert Leach told jurors in a federal courthouse in San Jose that 57-year-old Balwani piloted the firm alongside Holmes and that the pair were "partners in everything, including their crime."
But Holmes and Balwani each rejected the accusation in court, countering that they truly believed in the potential of Theranos in what was failure, not fraud.
Balwani, nearly two decades Holmes's senior, was brought in to help steer the company she founded in 2003 at just 19 years of age.
Prosecutors alleged Holmes and Balwani were aware the technology did not work as advertised, but continued to promote it as revolutionary to patients and the investors who pumped money into the company.
As Theranos soared, it attracted luminaries such as Rupert Murdoch and Henry Kissinger, but a series of reports casting doubt on the firm's claims from Murdoch's own Wall Street Journal set the company's collapse in motion.