Sunny Balwani, No. 2 Theranos Executive, Is Sentenced for Fraud

Ramesh Balwani, the former chief functioning officer of the unsuccessful blood testing commence-up Theranos, was sentenced on Wednesday to practically 13 several years in prison for defrauding buyers and patients about the company’s small business and technology.

Mr. Balwani, 58, and his convicted co-conspirator, Elizabeth Holmes, 38, the founder of Theranos, had promised that the start off-up would revolutionize wellness care with equipment and assessments that could detect some sicknesses utilizing just a couple drops of blood. But those promises had been bogus, and Theranos grew to become a tale of Silicon Valley’s ambition and hoopla run amok.

Mr. Balwani, also known as Sunny, was convicted in July of 10 counts of wire fraud and two counts of conspiracy to dedicate wire fraud.

Judge Edward J. Davila of U.S. District Court docket for the Northern District of California sentenced Mr. Balwani to 155 months, which is 12 yrs and 11 months, as perfectly as three yrs of supervised release. Mr. Balwani need to surrender to custody on March 15.

His sentence was more time than that of Ms. Holmes, who was identified responsible of four counts of fraud in January and sentenced previous month to additional than 11 a long time in prison. Mr. Balwani ideas to enchantment. His legal professionals questioned that he be assigned to a minimum-protection satellite camp in Lompoc, Calif.

Even though wire fraud carries a greatest sentence of 20 yrs in prison, prosecutors had questioned that Mr. Balwani be sentenced to 15 a long time and purchased to pay extra than $800 million in restitution to traders. His attorneys experienced requested for just probation.

As they did in Ms. Holmes’s scenario, prosecutors told Choose Davila that a very long sentence would discourage Silicon Valley entrepreneurs and get started-up founders from stretching the reality. In court filings, they also wrote that a extensive sentence would “rebuild the belief traders need to have when funding innovators.”

Jeffrey Schenk, an assistant U.S. lawyer and direct prosecutor, explained in court on Wednesday that Mr. Balwani really should receive a more time sentence than Ms. Holmes mainly because he oversaw Theranos’s lab, which endangered clients.

“Mr. Balwani had sizeable autonomy in jogging the lab. He built conclusions that specifically impacted the info that was communicated to individuals,” Mr. Schenk claimed. The lab, he extra, was the supply of “some of the finest hurt.”

Jeffrey Coopersmith, a attorney for Mr. Balwani, blamed Ms. Holmes, who was not observed responsible of defrauding individuals. “She was the C.E.O. She was the facial area of Theranos,” he stated.

Mr. Balwani, who appeared in court docket with his relatives associates, did not study a assertion to the decide. No victims spoke.

Michael Weinstein, a previous federal prosecutor who potential customers white-collar litigation at the legislation firm Cole Schotz, mentioned Mr. Balwani faced hurdles because he did not have “some of the same sympathies Ms. Holmes has.” He additional that Mr. Balwani “being a minimal bit older and wiser” meant “the court would count on far more from him as an govt.”

Before Theranos, Mr. Balwani labored at software organizations and served lead an e-commerce start-up, the place he acquired a reported $40 million payout at the height of the dot-com boom. He and Ms. Holmes satisfied when he was 37 and she was 18, and they begun dating in secret shortly right after Ms. Holmes started out Theranos in 2003. Mr. Balwani joined the business and invested $4.6 million in it in 2009.

Soon after The Wall Road Journal exposed that Theranos’s assessments did not do the job as marketed in 2015, Mr. Balwani remaining the organization in 2016 and break up with Ms. Holmes. Theranos shut down in 2018.

That 12 months, federal prosecutors charged Mr. Balwani and Ms. Holmes with fraud. Their instances were being afterwards separated, and Mr. Balwani went on demo this calendar year.

Prosecutors argued at the demo that he had identified that Theranos’s know-how did not work as promised because he was enmeshed in nearly each and every aspect of the organization. Apart from leading the company’s lab, he created its money projections and attended many conferences with investors.

Mr. Balwani’s lawyers argued that he experienced been a legitimate believer in Theranos and its mission. They mentioned Ms. Holmes, not Mr. Balwani, experienced been in cost.

Every single defendant was routinely mentioned in the other’s trial, but they did not testify against each individual other. In her trial, Ms. Holmes accused Mr. Balwani of emotional and sexual abuse, which Mr. Balwani has denied and was not permitted as proof in his demo.

Finally, a jury located Mr. Balwani guilty of defrauding Theranos’s buyers and patients. Right after the conviction, he questioned for and was denied a new demo.

Ms. Holmes, who is set to report to prison in April, signaled her strategies to charm her scenario in a filing this 7 days. In it, she cited prosecutors’ differing presentations of her romantic relationship with Mr. Balwani. The pair were being offered as equals in her trial. But in Mr. Balwani’s trial, her attorneys wrote, “the federal government took the reverse posture and highlighted Mr. Balwani’s age, practical experience and impact in excess of Ms. Holmes.”

In advance of imposing Mr. Balwani’s sentence, Choose Davila mirrored on Mr. Balwani’s instructional and small business historical past, declaring that the executive’s prior successes built his actions at Theranos “tragic.”

“This was a effective business. The strategy was strong,” Choose Davila reported, referring to Theranos. But when complications at the firm arose, he stated, Mr. Balwani “chose to go ahead with deception.”

Erin Griffith contributed reporting.