Holmes’ ex-partner faces conviction in Theranos case


A former Theranos executive learns on Wednesday whether he will be punished as harshly as his former lover and business partner for peddling the company’s bogus blood-testing technology that duped investors and endangered patients.

The sentencing of Ramesh ‘Sunny’ Balwani, who was convicted in July of fraud and conspiracy, comes less than three weeks after company founder and CEO Elizabeth Holmes was sentenced to more than 11 years in prison. jail for his role in the scheme. The scandal revolved around the company’s false claims that it had developed a medical device capable of detecting hundreds of diseases and other potential problems with just a few drops of blood taken with a finger prick.

The case shone a bright light on the dark side of Silicon Valley, exposing how its culture of hype and boundless ambition could turn into lies.

Holmes, 38, could have faced up to 20 years in prison – a sentence that US District Judge Edward Davila could now impose on Balwani, who spent six years as Theranos chief operating officer while remaining in love with Holmes until a bitter breakup in 2016.

While on the witness stand during her trial, Holmes accused Balwani, 57, of manipulating her through years of emotional and sexual abuse. Balwani’s lawyer denied the allegations.

The two trials had somewhat different results. Unlike Balwani, Holmes was acquitted of multiple fraud and conspiracy charges against people who paid for Theranos blood tests that produced misleading results and could have steered patients to the wrong treatment. The jury in Holmes’ trial is also deadlocked on three counts.

Balwani was found guilty on all 12 counts and his lawyers argue he deserves a much lenient sentence of just four to 10 months in prison, preferably house arrest. Justice Department prosecutors are seeking 15 years. A probation report recommends nine years.

Duncan Levin, a former federal prosecutor who is now a defense attorney, described Balwani’s offer for a light sentence as “totally unrealistic.” Levin suspects the judge gave more weight to recommendations from the Justice Department and the probation office, which mirror the sentencing agencies seeking for Holmes.

The judge ultimately sentenced him to 11 and a quarter years in prison and recommended that the sentence be served in a low-security facility in Byran, Texas.

The Justice Department “has now admitted that both defendants deserve the same sentence, even though Balwani was convicted on many more counts,” Levin said. Since Holmes was sentenced to 11 years in prison, “it logically follows that he will receive the same sentence.”

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 postponed a decision on restitution during Holmes’ November 18 sentencing until an unspecified future date.

In court documents, Balwani’s lawyers described him as a hard-working immigrant who left India for the United States in 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 then moved to Silicon Valley, where he first worked as a computer programmer for 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 she dropped out of Stanford University to start Theranos in 2003. He became fascinated with her and her quest to revolutionize healthcare.

Balwani’s lawyers said he eventually invested around $5 million in a stake in Theranos that was ultimately worth around $500 million on paper – a fraction of Holmes’ one-time fortune of $4.5 billion.

That wealth evaporated after Theranos began to crumble in 2015 amid revelations that its blood-testing technology never worked, as Holmes had touted in glowing magazine articles that compared it to Silicon Valley visionaries such as Apple co-founder Steve Jobs.

Prior to the fall of Theranos, Holmes partnered with Balwani to raise nearly $1 billion from deep-pocketed investors including software mogul Larry Ellison and media mogul Rupert Murdoch.

“Mr. Balwani is not the same as Elizabeth Holmes,” his lawyers wrote in a note to the judge. ‘”He actually invested millions of dollars of his own money; he never sought glory or recognition; and he has a long history of quiet donations to the less fortunate.” Balwani’s attorneys also claimed that Holmes “was considerably more culpable” for the Theranos fraud.

Echoing similar claims made by Holmes’ lawyers before his sentencing, Balwani’s lawyers also argued that he was properly punished by the intense media coverage of Theranos, which has been the subject of a book , a documentary and an award-winning television series.

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

Federal prosecutors framed Balwani as a ruthless, power-hungry accomplice in crimes that defrauded investors and jeopardized people who received flawed results. The blood tests were to be available through a partnership with Walgreen’s that Balwani helped devise.

“Balwani presented a false story about Theranos’ technology and financial stability day after day, meeting after meeting,” prosecutors wrote in their memo to the judge. “Balwani maintained this facade of achievement, having made a calculated decision that honesty would destroy Theranos.”

ABC News

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