COO Theranos Sunny Balwani charged with Federal Fraud

Theranos founder Elizabeth Holmes’ ex-boyfriend Ramesh “Sunny” Balwani, the former COO of the bankrupt blood-testing business, was found guilty of cheating investors and clients.

A lengthy trial that started in March with opening arguments was followed by four full days of jury deliberations. Balwani was found guilty of all 12 accusations against him by a jury of five men and seven women, including 10 counts of federal wire fraud and two counts of tax evasion of conspiracy to conduct wire fraud, and concluded that he had misled investors and patients alike.

A second jury in Holmes’ trial found her not guilty of the charges related to scamming patients, but they were unable to agree on three of the allegations related to deceiving investors.

Regarding four investor-related charges, she was found guilty. Indicted four years ago for allegedly cheating investors and clients were Holmes, the founder and former CEO of the failed blood-testing firm, and Balwani. After Holmes’ legal team revealed in court documents that she intended to bring claims about their relationship as part of her defense, their trials were stopped.

Balwani didn’t react much as his sentence was announced aloud. He then momentarily huddled with a limited support system in the courtroom after that. The judgment was rendered around six months after Holmes’ trial was over.

US Attorney Stephanie Hinds commended the jury for dutifully wading through the complicated problems presented by this case, in a statement delivered Thursday outside the courthouse. We respect the decision and eagerly anticipate the sentencing process, Hinds said.

Balwani defense lawyer Jeffrey Coopersmith of Orrick, Herrington & Sutcliffe stated the following in writing to CNN Business that the results have disappointed them.

They intend to investigate and weigh Mr. Balwani’s options, including an appeal. With Balwani’s decision, a rare criminal fraud case against two Silicon Valley startup executives concludes.

It also represents the end of an era for a business and its creator, who was once held up as the epitome of the entrepreneurial ambition of creating a game-changing invention.

The government called two dozen witnesses to support its case against Balwani, hoping to persuade the jury that he knew and purposefully lied to and mislead investors and patients for Theranos. The prosecution tried to explain all the facets of the alleged fraud, including hiding the use of equipment made by a third party, inflating financial statements, and misrepresenting work with the military and pharmaceutical firms.

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Balwani, 57, is subject to a maximum sentence of 20 years in prison, a fine of $250,000, and restitution for each count of conspiracy and wire fraud. In late September, Holmes, 38, is expected to get his punishment. In November, Balwani is expected to receive his punishment.