Ramesh “Sunny” Balwani, the former president of Theranos Inc. and ex-boyfriend of its founder Elizabeth Holmes, was found guilty of all charges against him for his role in the collapse of the $9 billion blood-testing startup.
The decision Thursday by a jury in federal court in San Jose, California, comes six months after Holmes was convicted of defrauding investors in the company, which promised to revolutionize the medical industry by using a few drops of blood to complete a wide array of health tests.
Balwani faces as long as 20 years in prison when he’s sentenced, just as Holmes does. Neither are likely to get that many years, though some legal experts have said Holmes could face a decade or more behind bars as the mastermind of the scheme.
Balwani’s attorney, Jeffrey Coopersmith, said he’s disappointed with the verdict.
“We plan to study and consider all of Mr. Balwani’s options including an appeal,” he said in a statement.
The pair were tried on charges of lying to investors and patients about the accuracy and capabilities of Theranos’s machines. As problems came to light, the company fell apart amid regulatory crackdowns, shareholder lawsuits and recriminations. The failure spawned books, a documentary and a television series.
While Holmes was the public face of the company, prosecutors said Balwani played an integral role. Jurors weighing his fate heard some of the same damaging evidence that led to Holmes’s conviction, including emails and texts tying the pair together, both professionally and romantically.
The panel also heard from a laboratory director, regulator and patient who didn’t testify against Holmes. That testimony was aimed at underscoring his familiarity with the failed blood tests.
Balwani’s jury of seven women and five men deliberated for about five days. As the verdict was read, he sat mostly still but was blinking frequently, looking side to side occasionally at his two lead lawyers. Afterward, he huddled with family members.
“Six months after the guilty verdicts in the Elizabeth Holmes trial, this jury has concluded that Holmes’s business partner, Ramesh Balwani, also bears responsibility for defrauding investors in Theranos,” San Francisco U.S. Attorney Stephanie Hinds said in a statement. “The jury also concluded that Balwani also perpetrated frauds on unsuspecting patients.”
The jury found Balwani guilty of two counts of conspiring with Holmes, six counts of defrauding investors and four counts of patient fraud. The verdict against Holmes was mixed, with jurors acquitting her of the patient fraud counts and unable to reach a decision on some of the investor fraud counts.
Seth Kretzer, a criminal defense lawyer not involved in the case, said even though Holmes was only found guilty of four counts, she probably has “more sentencing exposure” than Balwani because she took the stand in her own defense and he didn’t.
“The prosecutors will argue she ‘obstructed justice’ by testifying falsely,” he said.
Holmes is asking for her conviction to be set aside by the judge who presided over her trial. Her sentencing is set for September.
Balwani denied the government’s charges of conspiracy and fraud. His lawyers argued prosecutors cherry picked the thinnest fraction of bad blood-test results, and ignored millions of other tests that were recorded in a defunct Theranos database.
“Balwani ran the lab for a time and was just as involved as Holmes in management,” said Andrey Spektor, another defense lawyer not involved in the case. “To some extent, the government had a stronger case against him.”
The government’s case against Balwani was also made simpler, Spektor said, because it didn’t have to navigate Holmes’s claims that he sexually and psychologically abused her. Prosecutors “didn’t have to worry about the sympathy theme on which Holmes ended her defense,” he said. Balwani denied the abuse claims Holmes made against him at her trial.
During a closing argument that lasted more than 12 hours over three days, Balwani’s lawyer claimed that the Silicon Valley businessman was dazzled by Holmes the same way that investors and high-profile board members were.
“There’s no reason why he wouldn’t have seen the exact same thing: the charisma, the drive, the vision, the goal to change diagnostic testing. And he bought into that vision,” Coopersmith told the jury. “He bought into that vision not only with his time but also with his own money,” investing $4.6 million in the company.
Assistant U.S. Attorney John Bostic warned jurors not to be fooled.
“You should not believe that Mr. Balwani’s perspective on Ms. Holmes was an outsider’s perspective,” he said.
The prosecutor said they collaborated on every facet of Theranos’s operations, including walling off key information from some employees in an attempt to maintain the alleged fraud.
After Thursday’s verdict, U.S. District Judge Edward Davila increased Balwani’s bail from $500,000 to $750,000, secured by cash or real estate, which allows him to remain free while he awaits sentencing.
Balwani still faces an unresolved civil suit by the U.S. Securities and Exchange Commission alleging he committed securities fraud.
The case is U.S. v. Balwani, 18-cr-00258, U.S. District Court, Northern District of California (San Jose).
