SAN JOSE, Calif. –
A jury on Thursday convicted former Theranos executive Ramesh “Sunny” Balwani of collaborating with disgraced Theranos CEO Elizabeth Holmes in a massive fraud involving the blood-testing company that once captivated Silicon Valley. .
The 12-member jury found Balwani guilty on all 12 counts of defrauding both Theranos investors and patients who relied on unreliable blood tests that could have jeopardized their health.
Balwani sat impassively as the verdicts were read, blinking frequently.
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 abusing her while they were lovers. An attorney for Balwani has vehemently denied those charges.
Both Holmes, 38, and Balwani, 57, face up to 20 years in prison.
Holmes is scheduled to be sentenced at the end of September. Balwani’s sentencing date is expected to be set in the coming days.
The dual convictions represented a resounding victory for federal prosecutors, who seized on the Theranos case as a rare opportunity to hold ambitious entrepreneurs accountable for engaging in tech hyperbole as they sought fame and fortune. In the process, they hoped to discourage the practice of making bold, unproven promises about fledgling products, a startup strategy known as “fake it until you make it.”
After the verdicts were read and the jury was dismissed, Balwani approached his two brothers who were sitting behind him for what appeared to be a solemn discussion. The three of them sat in silence, heads bowed.
While Holmes insinuated during her trial that Balwani manipulated her into making poor decisions, Balwani’s attorneys explicitly sought to place the blame directly on Holmes for any misconduct.
As part of Balwani’s defense, lawyers pointed out that Holmes was not only the CEO, but also a Silicon Valley star who persuaded investors to invest nearly $1 billion in Theranos. Holmes boasted that his company had found a way to screen for hundreds of potential diseases with a device called Edison that could test just a few drops of blood taken from a finger prick. Such technology could potentially revolutionize medical care.
But it turned out that the Edison never worked properly and provided faulty test results that Theranos conducted as part of a deal to set up mini-labs in Walgreen’s pharmacies. Flaws in Theranos’ vaunted technology led Holmes and Balwani to switch their tests to conventional machines made by other vendors and while drawing vials of blood from patients’ veins, a far cry from Holmes’s promises.
After committing about $15 million of his own money to bolster Theranos and then becoming the company’s COO in 2010, Balwani eventually oversaw the blood-testing lab that was turning in inaccurate results and oversaw the Walgreen deal.
Unlike Holmes, who spent seven days on the witness stand during his trial, Balwani did not testify in his own defense.