Former Theranos executive Ramesh “Sunny” Balwani was sentenced Wednesday to nearly 13 years in prison for his role in the company’s blood test fraud — a slightly longer sentence than the CEO, his lover, was given and with one of Silicon Valley’s. biggest scandal.
Balwani was convicted in July of fraud and conspiracy connected to the company’s bogus medical technology that defrauded investors and put patients at risk. His sentence came less than three weeks after Elizabeth Holmes, the company’s founder and CEO, received more than 11 years in prison for his part in the plot, divided into one book, HBO documentary and award-winning TV consecutively.
Balwani’s sentence was less than the 15 years sought by federal prosecutors, who described him as a violent, power-hungry man. But it was longer than the four to 10 months his lawyers had sought.
The scandal revolved around false claims by the company that it had developed a device that could scan for hundreds of diseases and other potential problems with just a few drops of blood taken with a finger prick.
After years of promoting the technology, Holmes and Balwani were warned that the blood tests were inaccurate, but they continued to raise money from investors, including from billionaires like software magnate Larry Ellison and media magnate Rupert Murdoch, and deployed the technology in some Walgreens. shops.
US District Judge Edward Davila said the financial statements made by Balwani “were not just projections, they were lies” and “a true departure from honest business practices.”
The case shines a bright light on the dark side of Silicon Valley, exposing how the culture of hype and boundless ambition can be false.
Holmes, 38, and Balwani, 57, could face up to 20 years in prison. Balwani spent six years as chief operating officer of Theranos while remaining romantically involved with Holmes until a bitter split in 2016.
Former federal prosecutor Amanda Kramer said the harsher sentence seemed appropriate, because the jury in Balwani’s trial convicted him on every count while the jury in Holmes’ separate case acquitted him on several. cases and deadlocked others.
“It’s not surprising that he got a much harsher sentence because his misconduct was so egregious,” Kramer said.
While on the witness stand in his trial, Holmes accuses Balwani to manipulate her through years of emotional and sexual abuse. Balwani’s lawyer denied the allegations.
Federal prosecutors also want the judge to order Balwani to pay $804 million in restitution to defrauded investors — the same amount sought from Holmes. Davila deferred a decision on the restitution to a later hearing, as he did during Holmes’ sentencing on Nov. 18, when he received 11 1/4 years in prison.
In court documents, Balwani’s lawyers painted him as a hard-working immigrant who moved from India to the US during the 1980s to become the first member of his family to attend college. He graduated from the University of Texas in 1990 with a degree in information systems.
He later moved to Silicon Valley, where he first worked as a computer programmer Microsoft before founding an online startup that he sold for millions of dollars during the dot-com boom of the 1990s.
Balwani and Holmes met around the same time he dropped out of Stanford University to start Theranos in 2003. She was drawn to him and his desire to change health care.
Balwani’s lawyers say he eventually invested about $5 million in a stake in Theranos that eventually became worth about $500 million on paper — a fraction of Holmes’ one-time fortune of $4.5 billion.
That fortune vanished after Theranos began unraveling in 2015 amid revelations that its blood-testing technology never worked as Holmes had boasted in glowing magazine articles that likened him to Silicon Valley visionaries. like Apple co-founder Steve Jobs.
Before Theranos’ downfall, Holmes partnered with Balwani to raise nearly $1 billion from deep-pocketed investors.
“Mr. Balwani is not the same as Elizabeth Holmes,” his lawyers wrote in a memo to the judge. “” 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 the poor.” Balwani’s lawyers also asserted that Holmes was “far more culpable” for defrauding Theranos.
Echoing similar claims made by Holmes’ lawyers before his sentencing, Balwani’s lawyers also argued that he had been sufficiently punished by the intense media coverage of Theranos.
Balwani “lost his career, his reputation and his ability to meaningfully work again,” his lawyers wrote.
Federal prosecutors dismissed Balwani as a ruthless, power-hungry accomplice in crimes who fleeced investors and endangered people who received false results. The blood tests are available in partnership with Walgreen’s which Balwani helped engineer.
“Balwani presented a false story about Theranos’ technology and financial strength day after day in meeting after meeting,” prosecutors wrote in their memo to the judge. “Balwani maintained this front of accomplishments, after making the calculated decision that honesty would destroy Theranos.”
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