Theranos in Court: Jury Finds Balwani Guilty on All 12 Counts

Guilty, guilty, guilty, etc. According to media reports, former Theranos chief operating officer Ramesh “Sunny” Balwani sat stoically as the federal San Jose jury found him guilty of all 10 ten counts of wire fraud and two counts of conspiracy to commit wire fraud on July 7. It’s an experience to which his former lover and business partner, Elizabeth Holmes, was also subjected. Six months earlier, Holmes was also found guilty on wire fraud charges in the same courtroom. She at least had the consolation of being found not guilty on seven of 11 charges.

The Balwani Trial

Balwani’s trial received far less attention than that of his partner in crime. A big reason for that is personality. While Holmes was literally the face of Theranos, lauded by the financial press and dubbed as the next Steve Jobs, Balwani was the silent partner who operated behind the scene. And while Holmes made the audacious move of personally testifying at her trial, Balwani kept his mouth shut and let his lawyers do all the talking.

Setting aside the spectacle/entertainment aspect, the trials were pretty parallel with both Holmes and Balwani deploying the same legal strategy, namely, blaming all of the ills done by Theranos on the other. Holmes took the stand to paint Balwani as an abusive bully who pulled all the strings. Balwani claimed he was just another defrauded investor who was suckered by Holmes’ charms.

But in each case, prosecutors were successful in tying the crimes of Theranos to the defendant in the docket. Perhaps the climactic moment in the Balwani case was the reading of Sunny’s own texts pronouncing himself responsible for everything that happens at Theranos.

It was a pathetic twist to a relationship that began in 2009 when Balwani first joined Theranos to oversee the day-to-day operations of the company’s lab. As Balwani’s lawyers repeatedly stress, Holmes founded the company to serve as the platform for her supposedly miraculous new Edison device capable of scanning for hundreds of potential diseases from just a few drops of blood taken with a finger prick. The lab on a chip would revolutionize health care, Holmes boasted.

Holmes and Balwani knew that Edison was a fraud. Before long, Theranos shunted the device to a side lab and shifted almost all of its testing to conventional machines created by other vendors. What was real were the patients whose blood samples they actually tested, along with the billions of dollars they seduced out of investors and business partners like Walgreens. Holmes’ charisma, charm, and looks suckered the financial press and turned Theranos into a media sensation.

What few knew at the time was that the Holmes-Balwani partnership extended beyond business. The two diligently kept their romantic relationship a secret from Theranos employees, board members, and investors. The romance between Holmes, now age 38, and Balwani, now age 57, became a subject of public fascination, perhaps best exemplified in The Dropout, the Hulu miniseries about the rise and fall of Holmes and the Theranos mirage she created.

What Happens Next

For all the twists and turns, Holmes and Balwani are now in nearly identical positions with both facing up to 20 years in prison for defrauding Theranos investors and, more importantly in Balwani’s case, patients, by making false claims about the capabilities of their fingerstick blood testing technology. (Holmes was able to beat the patient fraud charges leveled against her.) Holmes will learn her fate on Sept. 26; Balwani’s sentencing is scheduled for Nov. 15.

Holmes is currently free after posting bail of $500,000. After the verdict of Balwani's trial, Judge Edward Davila raised Balwani’s bail from $500,000 to $750,000.