Former Theranos executive Sunny Balwani convicted of fraud

A California jury has convicted Theranos executive Ramesh “Sunny” Balwani on 12 counts of fraud for his involvement in the unreliable blood testing service run by CEO Elizabeth Holmes.

The 57-year-old former chief operating officer was accused of duping both investors and patients that trusted the company. Holmes, 38, was convicted on four counts of fraud and conspiracy in January. Both disgraced executives face up to 20 years in prison. Holmes will be sentenced in early fall.

Theranos’ systems relied on a seemingly revolutionary device called Edison, which the company said could detect diseases by using just a few droplets of blood. The promise attracted investors who poured nearly $1 billion into the company.

Ramesh "Sunny" Balwani, right, the former lover and business partner of Theranos CEO Elizabeth Holmes, walks into federal court in San Jose, Calif., Friday, June 24, 2022. (Michael Liedtke/)

Prosecutors claimed Edison was not as effective as claimed, despite the company using its false promises to set up a deal with drug giant Walgreens.

Balwani poured $15 million of his own money into Theranos before becoming its COO in 2010. He also supervised the Walgreens collaboration. He will be sentenced Nov. 15.

Holmes, a Stanford University dropout, started Theranos in 2003 by raising hundreds of millions of dollars from private investors including media mogul Rupert Murdoch. She was 19 years old when the company launched. A decade later, Theranos was valued at $10 billion. Companies including Safeway joined Walgreens in investing in Theranos mini-labs.

Forbes called Holmes the world’s “youngest self-made female billionaire” in 2014. She was then 30 years old and worth $3.6 billion.

Things began unravelling for the biotech entrepreneur and her brand in 2015 when its technologies came under scrutiny. She and Balwani were charged with fraud in 2018. That’s also when Theranos was dissolved.

Holmes accused Balwani of abusing her sexually and emotionally during their partnership. His attorneys denied that claim at trial. She also told jurors she’d unsuccessfully asked Murdoch to squash an investigation by the Wall Street Journal — which he owns — fearing it would expose her company’s predicament.

Balwani is a native of Pakistan who reportedly studied at the University of Texas at Austin and went on to work for Microsoft. He went on to help run Commerce.com, which was purchased by Commerce One. That netted him $40 million, according to the Wall Street Journal.

He was married to a Japanese artist when he enrolled at Berkley to resume his studies in 2002, when he met Holmes. He then divorced his wife.

Balwani and Holmes at some point became partners romantically as well as in business.

In June 2018, the U.S. Attorneys Office in the Northern District of California announced that a grand jury indictment accused the pair of using “advertisements and solicitations to encourage and induce doctors and patients to use Theranos’s blood testing laboratory services, even though the defendants knew Theranos was not capable of consistently producing accurate and reliable results for certain blood tests.”

The FBI in San Francisco released a statement after Balwani’s conviction stating, “Lies, deceit, and criminal actions cannot replace innovation and success.”

Prosecutors hoped to make the Theranos case a deterrence against the “Fake it until you make it” approach frequently used by startup companies.

With News Wire Services