CNN Business
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Ramesh “Sunny” Balwani, the previous chief working officer of failed blood testing startup Theranos, was sentenced Wednesday to just about 13 years in jail for fraud. It marks an finish to the gorgeous downfall of a high-flying Silicon Valley firm that resulted within the uncommon 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,” mentioned Stephanie Hinds, US Attorney for the Northern District of California, in an announcement. “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.”
Jeffrey Coopersmith, Balwani’s legal professional, mentioned in an announcement: “We are disappointed with the outcome. We respectfully disagree and plan to appeal.”
The sentencing comes weeks after Elizabeth Holmes, the founding father of Theranos and Balwani’s ex-girlfriend, was sentenced to greater than 11 years in jail.
Theranos raised $945 million from an A-list cohort of traders with its promise to check for a variety of circumstances utilizing only a few drops of blood. At its peak, the corporate was valued at $9 billion.
The firm started to unravel after a Wall Street Journal investigation in 2015 reported that Theranos had solely ever carried out roughly a dozen of the lots of of exams it supplied utilizing its proprietary expertise, and with questionable accuracy. It additionally got here to mild that Theranos was counting on third-party manufactured gadgets from conventional blood testing firms fairly than its personal expertise. Theranos finally dissolved in September 2018.
Holmes and Balwani had been first indicted collectively 4 years in the past on the identical 12 prison prices pertaining to defrauding traders and sufferers about Theranos’ capabilities and enterprise dealings as a way to get cash. Their trials had been severed after Holmes indicated she meant to accuse Balwani of sexually, emotionally and psychologically abusing her all through their decade-long relationship, which coincided along with her time working the corporate. (Balwani’s attorneys have denied her claims.)
In July, Balwani was discovered responsible on all 12 prices he confronted, which included ten counts of federal wire fraud and two counts of conspiracy to commit wire fraud. Holmes was discovered responsible in January on 4 prices referring to defrauding traders, and located not responsible on three further prices regarding defrauding sufferers and one cost of conspiracy to defraud sufferers.
Like Holmes, Balwani confronted as much as 20 years in jail in addition to a nice of $250,000 plus restitution for every depend.
In a current court docket submitting, prosecutors famous that Balwani was convicted not solely of defrauding traders but additionally defrauding sufferers. They really useful a 15-year jail sentence for him, in addition to an order for Balwani to pay $804 million in restitution. In a separate submitting, attorneys for Balwani requested a sentence of probation, noting he had no prison historical past.
Before becoming a member of Theranos, Balwani had a profession as a software program government. Balwani, almost 20 years older than Holmes, first met her in 2002 earlier than she dropped out of Stanford. He served as an off-the-cuff adviser to Holmes in Theranos’ earliest days and the 2 grew to become romantically concerned. Balwani assured a “multimillion-dollar loan” to the startup in 2009, court docket filings present, and took on a proper function as president and chief working officer. Holmes and Balwani largely saved their romantic relationship hidden whereas working collectively.
During her trial, Holmes claimed Balwani tried to manage almost each facet of her life — together with disciplining her consuming, her voice and picture, and isolating her from others. She testified that whereas he didn’t management her interactions with traders, enterprise companions and others, “he impacted everything about who I was, and I don’t fully understand that.”
Holmes is predicted to attraction her conviction however was ordered to show herself into custody on April 27, 2023.