Ex-Theranos CEO Balwani Sentenced to Nearly 13 Years in Prison for Fraud

Dec 7 (Reuters) – A U.S. judge on Wednesday sentenced former Theranos Inc President Ramesh “Sunny” Balwani to 12 years and 11 months in prison for defrauding investors and investors in a blood testing startup led by Elizabeth Holmes. patient. The U.S. Attorney’s Office confirmed.

U.S. District Judge Edward Davila in San Jose, California, handed down sentence on Balwani, who was found guilty by a jury in July of two counts of conspiracy and 10 counts of fraud .

Prosecutors said Balwani, 57, conspired with Holmes, 38, to deceive Silicon Valley investors into believing the company had miniaturized machines that could accurately perform a wide range of medical diagnostic tests from small amounts of blood.

At the same time, the company secretly relied on traditional methods for testing and provided inaccurate results to patients, prosecutors said.

Holmes, who started the company and became its public face as a college student, was sued in 2018 along with her ex-lover, Balwani.

Davila later sanctioned each individual trial after Holmes said she would testify that Balwani was abusive during their relationship. He has denied the allegations.

Holmes was convicted in January of four counts of fraud and conspiracy but was acquitted.

Davila sentenced Holmes to 11-1/4 years in prison at a hearing last month, saying Theranos was a “corporation broken by lies, misrepresentations, apparent arrogance and lies.”

Prosecutors then argued that Balwani should be sentenced to 15 years in prison, saying he knew Theranos’ tests were inaccurate from overseeing the company’s lab operations and decided to “put Theranos’ financial health over the actual health of patients.”

The probation office recommended a nine-year sentence.

Balwani’s lawyers asked for a suspended sentence, arguing he was trying to make the world a better place through Theranos, not out of fame or greed.

Theranos, once valued at $9 billion, promised to revolutionize the way patients are diagnosed by replacing traditional labs with tiny machines envisioned for use in homes, drugstores and even the battlefield.

The company collapsed after a series of Wall Street Journal articles in 2015 questioned its technology.

The case is US v. Balwani, U.S. District Court for the Northern District of California, No. 18-cr-00258.

Reporting by Jody Godoy in New York; Editing by Noeleen Walder and Bill Berkrot

Our Standards: The Thomson Reuters Trust Principles.

jody godoy

Thomson Reuters

Jody Godoy reports on banking and securities law.Contact her at jody.godoy@thomsonreuters.com

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