Ramesh “Sunny” Balwani, the previous chief working officer of failed blood testing startup Theranos, was sentenced Wednesday to just about 13 years in jail for fraud. It marks an finish to the beautiful downfall of a high-flying Silicon Valley firm that resulted within the uncommon convictions of two tech executives.
“There is an unfortunate saying in Silicon Valley: ‘Fake it ‘til you make it.’ Elizabeth Holmes and Sunny Balwani stretched this idea to a place much farther than the law allows and in so doing put vast amounts of investor dollars at risk,” mentioned Stephanie Hinds, US Legal professional for the Northern District of California, in an announcement. “Significantly, today the court also made clear that Sunny Balwani’s decision to deceive doctors and patients also put the health of patients at risk. Ms. Holmes and Mr. Balwani now will be justly punished for their illegal conduct.”
Hinds added, “Let this story be a cautionary tale for entrepreneurs in this district: Those who use lies to cover up the shortfalls of their promised accomplishments risk substantial jail time.”
The sentencing comes weeks after Elizabeth Holmes, the founding father of Theranos and Balwani’s ex-girlfriend, was sentenced to greater than 11 years in jail.
Theranos raised $945 million from an A-list cohort of traders with its promise to check for a variety of circumstances utilizing just some drops of blood. At its peak, the corporate was valued at $9 billion.
The corporate started to unravel after a Wall Avenue Journal investigation in 2015 reported that Theranos had solely ever carried out roughly a dozen of the a whole bunch of assessments it supplied utilizing its proprietary expertise, and with questionable accuracy. It additionally got here to gentle that Theranos was counting on third-party manufactured gadgets from conventional blood testing corporations somewhat than its personal expertise. Theranos finally dissolved in September 2018.
Holmes and Balwani had been first indicted collectively 4 years in the past on the identical 12 prison fees pertaining to defrauding traders and sufferers about Theranos’ capabilities and enterprise dealings to be able to get cash. Their trials had been severed after Holmes indicated she meant to accuse Balwani of sexually, emotionally and psychologically abusing her all through their decade-long relationship, which coincided along with her time working the corporate. (Balwani’s attorneys have denied her claims.)
In July, Balwani was discovered responsible on all 12 fees he confronted, which included ten counts of federal wire fraud and two counts of conspiracy to commit wire fraud. Holmes was discovered responsible in January on 4 fees regarding defrauding traders, and located not responsible on three further fees regarding defrauding sufferers and one cost of conspiracy to defraud sufferers.
Like Holmes, Balwani confronted as much as 20 years in jail in addition to a fantastic of $250,000 plus restitution for every depend.
In a current courtroom submitting, prosecutors famous that Balwani was convicted not solely of defrauding traders but additionally defrauding sufferers. They really useful a 15-year jail sentence for him, in addition to an order for Balwani to pay $804 million in restitution. In a separate submitting, attorneys for Balwani requested a sentence of probation, noting he had no prison historical past.
Earlier than becoming a member of Theranos, Balwani had a profession as a software program govt. Balwani, practically 20 years older than Holmes, first met her in 2002 earlier than she dropped out of Stanford. He served as a casual adviser to Holmes in Theranos’ earliest days and the 2 turned romantically concerned. Balwani assured a “multimillion-dollar loan” to the startup in 2009, courtroom filings present, and took on a proper position as president and chief working officer. Holmes and Balwani largely saved their romantic relationship hidden whereas working collectively.
Throughout her trial, Holmes claimed Balwani tried to regulate practically each facet of her life — together with disciplining her consuming, her voice and picture, and isolating her from others. She testified that whereas he didn’t management her interactions with traders, enterprise companions and others, “he impacted everything about who I was, and I don’t fully understand that.”
Holmes is anticipated to enchantment her conviction however was ordered to show herself into custody on April 27, 2023.