Tag: ramesh balwani

Former Theranos COO sentenced to nearly 13 years | CNN Business

CNN Business
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Ramesh “Sunny” Balwani, the former chief operating officer of failed blood testing startup Theranos, was sentenced Wednesday to nearly 13 years in prison for fraud. It marks an end to the stunning downfall of a high-flying Silicon Valley company that resulted in the rare convictions of two tech executives.

“There is an unfortunate saying in Silicon Valley: ‘Fake it ‘til you make it.’ Elizabeth Holmes and Sunny Balwani stretched this idea to a place much farther than the law allows and in so doing put vast amounts of investor dollars at risk,” said Stephanie Hinds, US Attorney for the Northern District of California, in a statement. “Significantly, today the court also made clear that Sunny Balwani’s decision to deceive doctors and patients also put the health of patients at risk. Ms. Holmes and Mr. Balwani now will be justly punished for their illegal conduct.”

Hinds added, “Let this story be a cautionary tale for entrepreneurs in this district: Those who use lies to cover up the shortfalls of their promised accomplishments risk substantial jail time.”

The sentencing comes weeks after Elizabeth Holmes, the founder of Theranos and Balwani’s ex-girlfriend, was sentenced to more than 11 years in prison.

Theranos raised $945 million from an A-list cohort of investors with its promise to test for a wide range of conditions using just a few drops of blood. At its peak, the company was valued at $9 billion.

The company began to unravel after a Wall Street Journal investigation in 2015 reported that Theranos had only ever performed roughly a dozen of the hundreds of tests it offered using its proprietary technology, and with questionable accuracy. It also came to light that Theranos was relying on third-party manufactured devices from traditional blood testing companies rather than its own technology. Theranos ultimately dissolved in September 2018.

Holmes and Balwani were first indicted together four years ago on the same 12 criminal charges pertaining to defrauding investors and patients about Theranos’ capabilities and business dealings in order to get money. Their trials were severed after Holmes indicated she intended to accuse Balwani of sexually, emotionally and psychologically abusing her throughout their decade-long relationship, which coincided with her time running the company. (Balwani’s attorneys have denied her claims.)

In July, Balwani was found guilty on all 12 charges he faced, which included ten counts of federal wire fraud and two counts of conspiracy to commit wire fraud. Holmes was found guilty in January on four charges relating to defrauding investors, and found not guilty on three additional charges concerning defrauding patients and one charge of conspiracy to defraud patients.

Like Holmes, Balwani faced up to 20 years in prison as well as a fine of $250,000 plus restitution for each count.

In a recent court filing, prosecutors noted that Balwani was convicted not only of defrauding investors but also defrauding patients. They recommended a 15-year prison sentence for him, as well as an order for Balwani to pay $804 million in restitution. In a separate filing, attorneys for Balwani requested a sentence of probation, noting he had no criminal history.

Before joining Theranos, Balwani had a career as a software executive. Balwani, nearly 20 years older than Holmes, first met her in 2002 before she dropped out of Stanford. He served as an informal adviser to Holmes in Theranos’ earliest days and the two became romantically involved. Balwani guaranteed a “multimillion-dollar loan” to the startup in 2009, court filings show, and took on a formal role as president and chief operating officer. Holmes and Balwani largely kept their romantic relationship hidden while working together.

During her trial, Holmes claimed Balwani tried to control nearly every aspect of her life — including disciplining her eating, her voice and image, and isolating her from others. She testified that while he didn’t control her interactions with investors, business partners and others, “he impacted everything about who I was, and I don’t fully understand that.”

Holmes is expected to appeal her conviction but was ordered to turn herself into custody on April 27, 2023.

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December 7, 2022
Elizabeth Holmes scheduled to be sentenced on Friday | CNN Business

CNN
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Elizabeth Holmes, the founder of failed blood testing startup Theranos who was convicted of fraud earlier this year, is scheduled to be sentenced on Friday morning by a judge in court in San Jose, California.

Holmes, who was found guilty in January on four charges of defrauding investors, faces up to 20 years in prison as well as a fine of $250,000 plus restitution for each count.

Lawyers for the government asked for a 15-year prison term, as well as probation and restitution, while Holmes’ probation officer pushed for a nine-year term. Holmes’ defense team asked Judge Edward Davila, who is presiding over her case, to sentence her to up to 18 months of incarceration followed by probation and community service.

More than 100 people wrote letters in support of Holmes to Davila, asking for leniency in her sentencing. The list includes Holmes’ partner, Billy Evans, many members of Holmes’ and Evans’ families, early Theranos investor Tim Draper, and Sen. Cory Booker. Booker described meeting her at a dinner years before she was charged and bonding over the fact that they were both vegans with nothing to eat but a bag of almonds, which they shared.

“I still believe that she holds onto the hope that she can make contributions to the lives of others, and that she can, despite mistakes, make the world a better place,” Booker wrote, noting that he continues to consider her a friend.

Friday’s sentencing hearing caps off Holmes’ stunning downfall. Once hailed as a tech industry icon for her company’s promises to test for a range of conditions with just a few drops of blood, she is now the rare tech founder to be convicted and face prison time for her company’s missteps.

Holmes, now 38, started Theranos in 2003 at the age of 19 and soon thereafter dropped out of Stanford University to pursue the company full-time. After a decade under the radar, Holmes began courting the press with claims that Theranos had invented technology that could accurately and reliably test for a range of conditions using just a few drops of blood taken from a finger prick.

Theranos raised $945 million from an impressive list of investors, including media mogul Rupert Murdoch, Oracle founder Larry Ellison, Walmart’s Walton family and the billionaire family of former Secretary of Education Betsy DeVos. At its peak, Theranos was valued at $9 billion, making Holmes a billionaire on paper. She was lauded on magazine covers, frequently wearing a signature black turtleneck that invited comparisons to late Apple CEO Steve Jobs. (She has not worn that look in the courtroom.)

The company began to unravel after a Wall Street Journal investigation in 2015 found the company had only ever performed roughly a dozen of the hundreds of tests it offered using its proprietary blood testing device, and with questionable accuracy. Instead, Theranos was relying on third-party manufactured devices from traditional blood testing companies.

In 2016, Theranos voided two years of blood test results. In 2018, Holmes and Theranos settled “massive fraud” charges with the Securities and Exchange Commission, but did not admit to or deny any of the allegations as part of the deal. Theranos dissolved soon after.

In her trial, Holmes alleged she was in the midst of a decade-long abusive relationship with her then-boyfriend and Theranos COO Ramesh “Sunny” Balwani while running the company. Balwani, she alleged, tried to control nearly every aspect of her life, including disciplining her eating, her voice and her image, and isolating her from others. (Balwani’s attorneys denied her claims.)

In July, Balwani was found guilty on all 12 charges in a separate trial and faces the same potential maximum prison time as her. Balwani is scheduled to be sentenced on December 7.

“The effects of Holmes and Balwani’s fraudulent conduct were far-reaching and severe,” federal prosecutors wrote in a November court filing regarding Holmes’ sentencing. “Dozens of investors lost over $700 million and numerous patients received unreliable or wholly inaccurate medical information from Theranos’ flawed tests, placing those patients’ health at serious risk.”

Holmes’ sentencing, however, could be complicated by developments in her life after stepping down from Theranos. Holmes and her partner, Evans, who met in 2017, have a young son. Holmes is also pregnant, as confirmed by recent court filings and her most recent court appearance in mid October.

Mark MacDougall, a white-collar defense lawyer and former federal prosecutor, told CNN Business that the fact that Holmes has a young child could impact how she is sentenced.

“I don’t know how it can’t, just because judges are human,” he said.

MacDougall also said he doesn’t see what a long prison sentence accomplishes. “Elizabeth Holmes is never going to run a big company again,” he said. “She’s never going to be in a position to have something like this happen again.”

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November 18, 2022
Elizabeth Holmes delays start of prison sentence with last-minute appeal | CNN Business

New York
CNN
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Elizabeth Holmes won’t be starting her 11-year prison sentence just yet.

The disgraced Theranos founder was previously expected to report to prison on Thursday, but she will remain free a little longer while the court considers a last-minute appeal, according to a filing Tuesday night.

Holmes was sentenced last November after she was convicted months earlier on multiple charges of defrauding investors while running the now-defunct blood testing startup. Earlier this month, her request to remain free while she appeals her conviction was denied by a judge, setting her up to report to prison on April 27.

On Tuesday, however, Holmes’ legal team filed an appeal of the judge’s decision. As a result, Holmes can remain free on bail while the latest appeal is considered by the court, as per the court’s rules.

Holmes dropped out of Stanford at the age of 19 to focus full-time on Theranos, the health tech startup which claimed to have invented technology that could accurately test for a range of conditions using just a few drops of blood. Theranos raised $945 million from an impressive list of investors and was valued at some $9 billion at its peak – making Holmes a paper billionaire.

Her company began to unravel after a Wall Street Journal investigation in 2015 reported that Theranos had only ever performed roughly a dozen of the hundreds of tests it offered using its proprietary technology, and with questionable accuracy. It also came to light that Theranos was relying on third-party manufactured devices from traditional blood testing companies rather than its own technology.

Holmes’ ex-boyfriend and former COO Ramesh “Sunny” Balwani was indicted alongside Holmes and convicted of fraud in a separate trial. Like Holmes, Balwani’s legal team delayed the start of his prison sentence by roughly a month with an appeal.

Balwani reported to prison last week to serve out his nearly 13-year sentence.

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April 12, 2021
Elizabeth Holmes reports to prison | CNN Business

CNN
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Elizabeth Holmes reported to prison on Tuesday, capping off a stunning downfall for the disgraced founder of failed blood testing startup Theranos.

Holmes was sentenced to more than 11 years in prison last November, after she was convicted months earlier on multiple charges of defrauding investors while running the now-defunct startup.

Her request to remain free on bail while she fights to overturn her conviction was denied by an appellate court earlier this month. Judge Edward Davila, who presided over her trial, ordered Holmes to turn herself in to the Bureau of Prisons by May 30 to begin serving her sentence.

Holmes arrived Tuesday at Federal Prison Camp Bryan in southern Texas, a minimum security federal prison camp that is approximately 100 miles from Houston, where she grew up before moving to California to attend Stanford.

“We can confirm Elizabeth Holmes has arrived at the Federal Prison Camp (FPC) Bryan in Bryan, Texas, and is in the custody of the Federal Bureau of Prisons,” a spokesperson for the Bureau of Prisons said in a statement provided to CNN.

Her ex-boyfriend and former Theranos COO Ramesh “Sunny” Balwani was also convicted of fraud, and reported to prison in California last month to begin serving out his sentence.

Holmes was once an icon in the tech world, serving as a posterchild for the limitless ambitions and potential of Silicon Valley. Now, she and Balwani are the rare tech executives tried for, and convicted on, fraud charges.

Holmes dropped out of Stanford at the age of 19 to focus full-time on Theranos, a startup that claimed to have invented technology that could accurately test for a range of conditions using just a few drops of blood. Theranos raised $945 million from an impressive list of investors and was valued at some $9 billion at its peak – making Holmes a paper billionaire. She graced magazine covers and engaged in public speaking events wearing a black turtleneck that invited comparisons to the late Apple CEO Steve Jobs.

Her company began to unravel after a Wall Street Journal investigation in 2015 reported that Theranos had only ever performed roughly a dozen of the hundreds of tests it offered using its proprietary technology, and with questionable accuracy. It also came to light that Theranos was relying on third-party manufactured devices from traditional blood testing companies rather than its own technology.

Theranos ultimately dissolved in September 2018.

Holmes and Balwani were first indicted together nearly five years ago on the same 12 criminal charges. Their trials were severed after Holmes indicated she intended to accuse Balwani of sexually, emotionally and psychologically abusing her throughout their decade-long relationship, which coincided with her time running the company. (Balwani’s attorneys have denied her claims.)

This month, Davila ordered Holmes and Balwani to pay restitution of roughly $452 million to victims of their crimes.

Before her sentencing was announced in November, a tearful Holmes spoke to the court in San Jose, California.

“I loved Theranos. It was my life’s work,” she said. “The people I tried to get involved with Theranos were the people I loved and respected the most. I am devastated by my failings.”

She went on to apologize to the employees, investors and patients of Theranos.

“I’m so, so sorry. I gave everything I had to build our company and to save our company,” she said. “I regret my failings with every cell in my body.”

– CNN’s Brad Parks contributed to this report.

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April 12, 2021