Home News Former Theranos COO, Sunny Balwani, Found Guilty Of Fraud

Former Theranos COO, Sunny Balwani, Found Guilty Of Fraud

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Balwani, 57, of Pakistani descent, was found guilty on Thursday by a federal jury in San Jose of two counts of conspiracy and ten counts of wire fraud committed as part of a multimillion-dollar scheme.

Former Theranos exec Ramesh Balwani convicted of fraud

A federal jury in the US has found Ramesh “Sunny” Balwani guilty on all counts related to a multimillion-dollar fraud scheme at the company founded by his ex-girlfriend Elizabeth Holmes, who was once hailed as Silicon Valley’s rising star. Balwani is the chief operating officer of the blood testing company Theranos.

Theranos employee Balwani, 57, who is of Pakistani descent, was found guilty on Thursday of 10 charges of wire fraud and two counts of conspiracy in connection with a multimillion dollar scheme to deceive investors and patients.

Federal Bureau of Investigation (FBI) Special Agent in Charge Sean Ragan and United States Attorney Stephanie Hinds released a statement.

When a trial that started in March of this year before United States District Judge Edward J. Davila and ended just over six months after a jury convicted Holmes guilty of one count of conspiracy and three counts of wire fraud in related proceedings, the jury came to its decision on Thursday.

This jury has determined that Ramesh Balwani, Elizabeth Holmes’ business partner, is also accountable for deceiving Theranos investors, six months after the guilty findings in the Elizabeth Holmes trial. According to Hinds, the jury found that Balwani also defrauded trusting patients.

In the interim, Balwani is still free on bond. Judge Davila set the sentencing hearing for November 15, 2022, at which time Balwani will be sentenced. For each count of conspiracy and each count of wire fraud, he may get a maximum sentence of 20 years in prison, a fine of USD 250,000, as well as restitution.

He worked there from September 2009 to July 2016; Holmes, who is 38, established the Palo Alto-based blood-testing business in 2003.

Balwani served Theranos in a number of positions throughout his time there, including president and chief operational officer as well as member of the board of directors.

The government presented evidence at trial showing that Balwani conspired to commit wire fraud against investors between 2010 and 2015, conspired to commit wire fraud against customers who paid for Theranos’ blood testing services between 2013 and 2016, and actually committed wire fraud against both investors and customers while working for Theranos.

According to the statement, the government provided evidence in support of conspiracy charges surrounding Balwani’s assertions that Theranos created a ground-breaking, proprietary analyzer known to the defendants by a variety of names, including the TSPU, Edison, or minilab.

Small blood samples obtained with a finger stick, according to Balwani and Holmes, might be used by the analyzer to run a full range of clinical tests. Additionally, they implied that the analyser would be able to do so faster than previously conceivable while still producing results that were more accurate and trustworthy than those obtained using traditional techniques.

The prosecution’s evidence at trial showed that Holmes and Balwani collaborated to mislead patients and investors despite knowing that many of the statements they made about the analyzer were untrue.

Holmes, Balwani, and others were aware that the analyzer had issues with accuracy and dependability, ran a small number of tests, moved more slowly than certain rival devices, and in some ways was not competitive with older, more traditional equipment.

The evidence also showed Balwani used advertisements and solicitations to entice and induce patients to use Theranos’s blood testing laboratory services, despite the fact that he was aware Theranos was unable to consistently produce accurate and dependable results for specific blood tests. This was in relation to substantive fraud charges.

The statement continued, citing evidence that Balwani had told investors that Theranos would make over $100 million in revenue in 2014, break even, and anticipate to make about $1 billion in revenue in 2015.

In reality, Theranos performed the majority of its blood tests using traditional machines acquired from third parties, and Balwani was aware that the business would only make minimal or insignificant profits in 2014 and 2015.

Numerous false statements about Theranos’s financial situation and future prospects were made by Balwani to prospective investors, according to the trial’s evidence.

The evidence established that Balwani misled investors when he claimed that Theranos would significantly increase the number of Wellness Centers within Walgreens locations, despite the fact that the company’s retail launch at Walgreens had been hampered by a variety of problems.

A federal grand jury handed down a superseding indictment in July 2020 that listed ten counts of wire fraud and two counts of conspiracy to commit wire fraud against Balwani.

Like Holmes, Balwani was accused with conspiring to commit wire fraud against Theranos investors from 2010 to 2015 as well as ten counts of wire fraud against customers who paid for the company’s blood testing services from 2013 to 2016.

The remaining four wire fraud accusations concerned patients who paid for Theranos’ blood testing services and advertising that Theranos purchased to draw those patients. Six of the wire fraud allegations related fraud against Theranos investors. Balwani was adjudicated guilty on all counts on Thursday.

On January 3, 2022, a different jury found Holmes guilty of the investor-related conspiracy count as well as three charges of wire fraud.

The jury cleared Holmes of the conspiracy wire fraud charge involving patients as well as three other wire fraud charges. In addition, one wire fraud charge involving a Theranos patient was dropped during Holmes’s trial.

In her trial, the jury was unable to agree on a judgement for three counts including investment fraud. Holmes’ sentence was set for September 26, 2022, by Judge Davila.

According to Ragan, the jury found that Theranos’ fraud qualified as a “criminal conspiracy.”

The FBI has been looking into this investment fraud scam for years.

Innovation and achievement cannot be replaced by lies, dishonesty, or illegal activity, according to FBI Special Agent in Charge Ragan.

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