California

Sunny Balwani guilty on 12 counts of fraud for duping Theranos investors and patients

Hard-nosed technology executive Ramesh ‘Sunny’ Balwani has been found guilty on 12 counts of fraud for his role in duping investors and patients over revolutionary technology claims of  blood-testing company Theranos.

A jury in San Jose, California spent two weeks deciding the verdict on 10 counts of federal wire fraud and two counts of conspiracy to commit wire fraud filed against Balwani, 57, for his role at Theranos, a blood-testing company founded by disgraced founder Holmes when she was just 19.

They pored over testimony, emails, salacious texts, and other evidence submitted during a three-month trial before finding him guilty on all 12 counts. 

‘Balwani is not a victim,’ Assistant U.S. Attorney Jeffrey Schenk said in his closing argument. ‘He is a perpetrator of the fraud. Mr. Balwani knows that the biggest threat to fraud is the truth.’

Each of the ten wire fraud charges carry a maximum sentence of 20 years in prison, with the conspiracy counts carrying a maximum five year sentence.  

After the verdicts were read and the jury was dismissed, Balwani walked over to his two brothers who were sitting behind him for what appeared to be a solemn discussion. The three sat quietly, heads bowed. 

Holmes, who dated Balwani as they operated the failed company, was found guilty on just four counts of fraud in a separate trial and faces up to 20 years in prison. 

Ramesh ‘Sunny’ Balwani (above) has been found guilty on all 12 counts for his role in duping investors and patients over revolutionary technology claims of blood-testing company Theranos, founded by disgraced CEO Elizabeth Holmes 

Balwani, 57, is the former business partner and secret lover of Holmes (left), with whom she built a fraudulent empire selling snake oil. The couple first met when Holmes was only 18, he helped her found her business as her COO

Balwani, 57, is the former business partner and secret lover of Holmes (left), with whom she built a fraudulent empire selling snake oil. The couple first met when Holmes was only 18, he helped her found her business as her COO

Balwani, 57, is the former business partner and secret lover of Holmes (left), with whom she built a fraudulent empire selling snake oil. The couple first met when Holmes was only 18, he helped her found her business as her COO

The duo's partnership was shown in the Hulu series, The Dropout, staring Amanda Seyfried (right) as Holmes and Naveen Andrews as Balwani (left)

The duo's partnership was shown in the Hulu series, The Dropout, staring Amanda Seyfried (right) as Holmes and Naveen Andrews as Balwani (left)

The duo’s partnership was shown in the Hulu series, The Dropout, staring Amanda Seyfried (right) as Holmes and Naveen Andrews as Balwani (left)

JURY FINDS RAMESH ‘SUNNY’ BALWANI GUILTY ON 12 FRAUD AND CONSPIRACY CHARGES

Following a three month trial this year, a San Jose, California jury found Ramesh ‘Sunny’ Balwani, 37, guilty on 12 counts of fraud and conspiracy over his role as COO of Theranos. 

The charges included: 

  • One count of conspiracy to commit wire fraud against Theranos investors 
  • One count of conspiracy to commit wire fraud against blood-testing patients
  • Six counts of wire fraud against Theranos investors
  • Four counts of wire fraud against blood-testing patients 

The conspiracy charges carry a maximum sentence of five years in prison, each. 

The fraud charges each carry a maximum sentence of 20 years in prison.

Holmes claimed that her 'Edison' device (named after Thomas Edison) was a mini lab that could process over 240 tests, from cholesterol to infectious disease. It was modeled to look like Steve Jobs' 'NeXT computer.' One whistleblower in the HBO doc said that 'pieces of the device would literally fall off in the middle of testing,' and centrifuges exploded on the inside. Eventually, Theranos used third-party commercial lab testing machines made by Siemens but continued to lie to investors about their 'groundbreaking' technology

Holmes claimed that her 'Edison' device (named after Thomas Edison) was a mini lab that could process over 240 tests, from cholesterol to infectious disease. It was modeled to look like Steve Jobs' 'NeXT computer.' One whistleblower in the HBO doc said that 'pieces of the device would literally fall off in the middle of testing,' and centrifuges exploded on the inside. Eventually, Theranos used third-party commercial lab testing machines made by Siemens but continued to lie to investors about their 'groundbreaking' technology

Holmes claimed that her ‘Edison’ device (named after Thomas Edison) was a mini lab that could process over 240 tests, from cholesterol to infectious disease. It was modeled to look like Steve Jobs’ ‘NeXT computer.’ One whistleblower in the HBO doc said that ‘pieces of the device would literally fall off in the middle of testing,’ and centrifuges exploded on the inside. Eventually, Theranos used third-party commercial lab testing machines made by Siemens but continued to lie to investors about their ‘groundbreaking’ technology

Balwani began dating Holmes, now 38, around the same time she dropped out of Stanford University in 2003 to found her startup. 

He helped Holmes behind the scenes until 2010 when he became Theranos’ chief operating officer while he was living with Holmes. 

Balwani eventually oversaw the blood-testing lab that was delivering the inaccurate results and supervised a Walgreen’s deal for his company’s misleading ‘Edison’ device . 

The couple broke up in 2016 as Theranos began to collapse amid revelations about serious problems with Theranos’ technology that they had concealed from investors and patients. 

Prosecutors ultimately brought on 24 government witnesses who testified that Balwani was a lead accomplice to the scheme. 

Balwani’s defense, who are expected to file an appeal, argued however that the government’s case was incomplete during 12-hours of closing arguments. 

‘Mr. Balwani put his heart and soul into Theranos, he worked tirelessly year after year to make the company a success,’ Jeffrey Coopersmith, a defense attorney for Balwani said. ‘The government hasn’t proved Mr. Balwani tried to deceive or cheat anybody.’

A separate jury spent seven days deliberating over the evidence in Holmes’ fraud trial before convicting her on four counts of investor fraud and conspiracy and acquitting her on four counts of patient fraud and conspiracy earlier this year. 

She could be sentenced to up to 20 years in prison by in a hearing scheduled for late September. 

The jury in Balwani’s trial is aware of Holmes’ conviction but has been ordered not to consider that in their deliberations.

Nearly 600 pages of private text messages were presented during Holmes’ fraud trial which revealed their lavish lifestyle – like planning trips to Las Vegas that included reservations at three star Michelin restaurants and thousand dollar hotels.

Other texts ranged from the mundane: business meetings, staff attendance, internal complaints, flight details and updates on their pet fish, to romantic love overtures: ‘This is our year,’ wrote Holmes, ‘We can never forget it tiger… for our kids never forget who we are.’

In another thread from May 2015, Holmes says, ‘You are breeze in desert for me. My water. And ocean … Meant to be only together tiger.’ 

She added: ‘Madly in love with you and your strength.’

Balwani’s texts were equally effusive: ‘Infinite love for you in every breath,’ he wrote in April 2016.

'You are breeze in desert for me. My water. And Ocean,' read the messages from Holmes to Balwani in May 2015, which were released during her trail

'You are breeze in desert for me. My water. And Ocean,' read the messages from Holmes to Balwani in May 2015, which were released during her trail

‘You are breeze in desert for me. My water. And Ocean,’ read the messages from Holmes to Balwani in May 2015, which were released during her trail

In another message from July 2015, Balwani tells Holmes to 'be strong' and that he loves her

In another message from July 2015, Balwani tells Holmes to 'be strong' and that he loves her

In another message from July 2015, Balwani tells Holmes to ‘be strong’ and that he loves her

Pictured: Balwani attending his trial last week. Prosecutors said that from the shadows, Balwani advised his girlfriend on how to run Theranos

Pictured: Balwani attending his trial last week. Prosecutors said that from the shadows, Balwani advised his girlfriend on how to run Theranos

Pictured: Balwani attending his trial last week. Prosecutors said that from the shadows, Balwani advised his girlfriend on how to run Theranos

Holmes, who dated Balwani as they operated the failed company, was found guilty on just four counts of fraud in a separate trial and faces up to 20 years in prison

Holmes, who dated Balwani as they operated the failed company, was found guilty on just four counts of fraud in a separate trial and faces up to 20 years in prison

Holmes, who dated Balwani as they operated the failed company, was found guilty on just four counts of fraud in a separate trial and faces up to 20 years in prison

Very little is known Balwani’s professional and private life, including why he got his nickname, ‘Sunny.’ Despite being a tech entrepreneur he remains a virtual ghost with almost no digital footprint.  

Balwani was born in Pakistan on June 13, 1965. His family eventually immigrated to the United States and Balwani got a bachelor degree in information systems from the University of Austin Texas.

He went on to work as a sales manager for Microsoft and Lotus Software before joining a start-up called CommerceBid.com as president, at the height of the dot-com boom in 1999.    

Forbes named Holmes the world's youngest self-made woman billionaire (worth $4.5 billion) in 2014, when she was 30 years old

Forbes named Holmes the world's youngest self-made woman billionaire (worth $4.5 billion) in 2014, when she was 30 years old

Forbes named Holmes the world’s youngest self-made woman billionaire (worth $4.5 billion) in 2014, when she was 30 years old

CommerceBid was a was a business-to-business auctioning platform that was purchased for $225 million in 2002 by Commerce One, a publicly traded company worth $20 billion. In the process, Balwani banked $40 million from the deal, just the dot-com bubble burst and rendered the company worthless.

As the New York Times said, ‘it was a routine dot-com rags-to-riches-to-rags story.’ 

Balwani divorced his Japanese artist wife in 2002, and went back to school for his M.B.A. 

It was around that time that he first met Holmes in Beijing as part of a summer Mandarin immersion program. Holmes was only 18 at the time and about to enter her freshman year at Stanford University, Balwani was 37. 

During her trial at the end of 2021, Holmes told the jury: ‘I talked to him about wanting to start a company, and a company that I tried to build in high school, and I asked for his advice.’

The pair became romantically involved not long after Holmes dropped out of Stanford in the fall of 2003 to found Theranos at age 19. By 2005, Holmes had moved into Balwani’s Palo Alto condominium. 

From the shadows, Balwani advised his girlfriend on how to run Theranos. Early employees said his presence was felt from behind the scenes, and that it was common for Holmes to begin sentences with ‘Sunny says.’

He officially joined the company in September 2009 as President and Chief Operating Officer, in spite of having no experience in medicine or lab testing. By that time, Theranos had burned though $47 million in seed money, and was on the brink of bankruptcy. Balwani kept things afloat with a personal $13 million investment. 

‘The company was low on cash, and I knew of the mission and that what the company was trying to do was paramount and I offered to help the company and I ended up giving a $13 million personal loan,’ said the former software executive, said in court testimony obtained by The Dropout podcast. ‘It was interest-free. It was a good-faith loan.’

Powerhouse Board of Directors: Holmes' success hinged on her ability to captivate powerful men. Sitting on her Board of Directors, were two former Secretaries of State, two Secretaries of Defense, and the Former CEO of Wells Fargo. Kissinger described Holmes as 'an excellent businesswoman.' He added: 'You have to remember, she has a sort of ethereal quality. She is like a member of a monastic order'

Powerhouse Board of Directors: Holmes' success hinged on her ability to captivate powerful men. Sitting on her Board of Directors, were two former Secretaries of State, two Secretaries of Defense, and the Former CEO of Wells Fargo. Kissinger described Holmes as 'an excellent businesswoman.' He added: 'You have to remember, she has a sort of ethereal quality. She is like a member of a monastic order'

Powerhouse Board of Directors: Holmes’ success hinged on her ability to captivate powerful men. Sitting on her Board of Directors, were two former Secretaries of State, two Secretaries of Defense, and the Former CEO of Wells Fargo. Kissinger described Holmes as ‘an excellent businesswoman.’ He added: ‘You have to remember, she has a sort of ethereal quality. She is like a member of a monastic order’

Holmes and Balwani bilked high-profile investors out of $900 million. Some of the biggest names included: the founders of Walmart, who gave $150million; Rupert Murdoch, who invested $125million; the Devos family office put in $100million. In addition to the scions of the Cox telecommunications family who lost $100million, as well as the Mexican tycoon Carlos Slim, Robert Kraft and the Oppenheimer family who once owned De Beers diamonds

Holmes and Balwani bilked high-profile investors out of $900 million. Some of the biggest names included: the founders of Walmart, who gave $150million; Rupert Murdoch, who invested $125million; the Devos family office put in $100million. In addition to the scions of the Cox telecommunications family who lost $100million, as well as the Mexican tycoon Carlos Slim, Robert Kraft and the Oppenheimer family who once owned De Beers diamonds

Holmes and Balwani bilked high-profile investors out of $900 million. Some of the biggest names included: the founders of Walmart, who gave $150million; Rupert Murdoch, who invested $125million; the Devos family office put in $100million. In addition to the scions of the Cox telecommunications family who lost $100million, as well as the Mexican tycoon Carlos Slim, Robert Kraft and the Oppenheimer family who once owned De Beers diamonds

In 2013, the couple purchased a five-bedroom, seven-bathroom house in the tony suburb of Atherton for $9 million under a limited liability company (LLC) which was named 'HMFR.' According to a court document, those initials stood for a prayer in Arabic that the couple often recited; the prayer translates to 'This too is my God's glory,' explained Holmes. Balwani sold the 6,800-square-foot property this past January for a whopping $15.8 million

In 2013, the couple purchased a five-bedroom, seven-bathroom house in the tony suburb of Atherton for $9 million under a limited liability company (LLC) which was named 'HMFR.' According to a court document, those initials stood for a prayer in Arabic that the couple often recited; the prayer translates to 'This too is my God's glory,' explained Holmes. Balwani sold the 6,800-square-foot property this past January for a whopping $15.8 million

In 2013, the couple purchased a five-bedroom, seven-bathroom house in the tony suburb of Atherton for $9 million under a limited liability company (LLC) which was named ‘HMFR.’ According to a court document, those initials stood for a prayer in Arabic that the couple often recited; the prayer translates to ‘This too is my God’s glory,’ explained Holmes. Balwani sold the 6,800-square-foot property this past January for a whopping $15.8 million

While Elizabeth focused on being the public-facing star of the company, Balwani’s job was to manage day-to-day operations on the backend. Their board of directors included a several former government officials and billionaires. 

Balwani’s mercurial management style was demanding, brutal and uncompromising. He quickly earned the reputation as Holmes’ fearsome ‘enforcer’ who ‘terrorized’ company employees with a corporate culture ruled by paranoia, subterfuge, bullying, and threats.  

‘Balwani took to firing people so often that it gave rise to a new expression at the company: to ‘disappear’ someone,’ reported John Carreyrou in the Wall Street Journal. That’s how Theranos employees referred to someone who was dismissed. ”Sunny disappeared him,’ they would say.’

The couple purchased a five-bedroom, seven-bathroom house in the tony suburb of Atherton in 2013. They created a limited liability company (LLC) to purchase the $9 million residence which was named ‘HMFR.’ 

According to a court document, those initials stood for a prayer in Arabic that the couple often recited; the prayer translates to ‘This too is my God’s glory,’ explained Holmes.

Later, after they broke up, Balwani bought out Holmes, who owned a 50% stake in the LLC, for $7.9 million in 2018. He sold the 6,800-square-foot property this past January for a whopping $15.8 million.

The Dropout recreated one of the Balwani's morning rally's he ran with Holmes ahead of the deal he was set to close with Walmart over their fraudulent blood testing device

The Dropout recreated one of the Balwani's morning rally's he ran with Holmes ahead of the deal he was set to close with Walmart over their fraudulent blood testing device

The Dropout recreated one of the Balwani’s morning rally’s he ran with Holmes ahead of the deal he was set to close with Walmart over their fraudulent blood testing device 

Unlike Holmes, Balwani did not take the stand in his own defense. Holmes, who was also found guilty earlier this year, was accompanied by her husband, Billy Evans (right)

Unlike Holmes, Balwani did not take the stand in his own defense. Holmes, who was also found guilty earlier this year, was accompanied by her husband, Billy Evans (right)

Unlike Holmes, Balwani did not take the stand in his own defense. Holmes, who was also found guilty earlier this year, was accompanied by her husband, Billy Evans (right) 

Unlike Holmes, who spent seven days on the witness stand during her trial, Balwani didn´t testify in his own defense.

Balwani’s defense mirrored Holmes´s in one key aspect: Both depicted the pair as tireless workers who believed so deeply in Theranos’ technology that they never sold their respective stakes in the Palo Alto, California, company. 

At one point in 2014, Holmes’ fortune was estimated at $4.5 billion while Balwani’s Theranos holdings were valued at $500 million.

But everything began to unravel in late 2015 after a series of explosive articles in The Wall Street Journal exposed rampant problems with Theranos’ technology. 

By May 2016, Holmes had dumped Balwani as her 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 through most of her trial.

Sunny Balwani guilty on 12 counts of fraud for duping Theranos investors and patients Source link Sunny Balwani guilty on 12 counts of fraud for duping Theranos investors and patients

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