The result puts Balwani and Holmes in similar situations. Holmes was convicted of four counts of investor fraud and conspiracy earlier this year. During that trial, Holmes tearfully accused Balwani of sexually and emotionally abusing her while the two were romantically involved. A lawyer for Balwani has vehemently denied the charges.
Holmes, 38, and Balwani, 57, face up to 20 years in prison.
After the verdicts, U.S. District Judge Edward Davila increased Balwani’s bond to $750,000 from $500,000 and set November 15 as his sentencing date. Holmes, who is free on $500,000 bond, is scheduled to be sentenced on September 26.
The double conviction represents a resounding victory for federal prosecutors, who seized the Theranos case as a rare opportunity to hold ambitious entrepreneurs accountable for engaging in technological hyperbole while pursuing fame and fortune. In the process, they hoped to discourage the practice of making bold, unproven promises about still-nascent products — a startup strategy known as “fake it until you make it.”
“We are pleased with the jury’s hard work and attention to the evidence presented. We appreciate the verdict and look forward to the sentencing process,” U.S. Attorney Stephanie Hinds said outside the courthouse.
Balwani did not respond to requests for comment as he left court with his legal team.
After the verdicts were read and the jury dismissed, Balwani walked over to his two brothers who were seated behind him for what appeared to be a solemn discussion. The three stood quietly with their heads bowed.
While Holmes insinuated during her trial that Balwani had manipulated her into making bad choices, Balwani’s lawyers explicitly sought to place blame for any wrongdoing entirely on Holmes.
As part of Balwani’s defense, attorneys pointed out that Holmes was not only the CEO, but also a Silicon Valley star who persuaded investors to pour nearly $1 billion into Theranos. Holmes boasted that her company had found a way to screen for hundreds of potential illnesses with a device called the Edison that could only test a few drops of blood taken with a finger prick. Such technology could potentially revolutionize healthcare.
But it turned out the Edison never worked properly, providing erroneous test results that Theranos conducted as part of a deal to set up mini-labs in Walgreen’s pharmacies. Flaws in Theranos’ vaunted technology prompted Holmes and Balwani to move their tests to conventional machines made by other vendors and while taking vials of blood from patients’ veins – a far cry from Holmes’ promises.
After pledging about $15 million of his own money to bolster Theranos and then becoming the company’s chief operating officer in 2010, Balwani eventually oversaw the blood-testing lab that provided the inaccurate results and oversaw the Walgreen’s deal. This crucial detail may have prompted the jury to find him guilty of defrauding patients while another jury acquitted Holmes of the same charges.
Balwani also prepared numerous projections of Theranos’ future earnings that helped the company raise funds from investors. These predictions turned out to be grossly exaggerated.
Unlike Holmes, who spent seven days on the witness stand during his trial, Balwani did not testify in his own defense. After Holmes’ trial, jurors who were interviewed by the media said they found her sympathetic if not entirely believable.
“The reason he didn’t testify is probably because he knows he doesn’t have Elizabeth’s charisma,” said Jill Huntley Taylor, a longtime jury consultant who is also helping with the strategy. of the trial.
Balwani’s decision not to tell his side of the story left jurors to make their decision based solely on the evidence, which included testimonies from witnesses who described him as an often abrasive framer.
“Just because the jurors haven’t heard from Balwani doesn’t mean they couldn’t form an opinion on him,” Huntley Taylor said.
Balwani’s defense mirrored Holmes’ in one key aspect: Both portrayed the pair as tireless workers who believed so deeply in Theranos technology that they never sold their respective stakes in the Palo Alto company, in California. At one point in 2014, Holmes’ fortune was estimated at $4.5 billion while Balwani’s Theranos holdings were valued at $500 million.
But it all started to fall apart in late 2015 after a series of bombshell articles in the Wall Street Journal exposed rampant problems with Theranos’ technology. By May 2016, Holmes had dropped Balwani as a business and romantic partner. Holmes is now the mother of an infant son fathered by her current partner, Billy Evans, who was by her side for most of her trial.