Ex-Theranos president Balwani sentenced to nearly 13 years for fraud

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

U.S. District Judge Edward Davila in San Jose, California, sentenced Balwani, who was convicted of two counts of conspiracy and 10 counts of wire fraud.

Balwani, 57, conspired with Holmes, 38, to defraud Silicon Valley investors that the company had achieved miniature machines that could accurately run a wide range of medical diagnostic tests from small amounts of blood, prosecutors said.

Meanwhile, the company secretly relied on traditional methods to run tests and gave inaccurate results to patients, prosecutors said.

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Holmes, who started the company as a college student and became its public face, was indicted in 2018 along with her former romantic partner Balwani.

Davila later granted each a separate trial after Holmes said he would take the stand and testify that Balwani was abusive in their relationship. He has denied the allegations.

Holmes was indicted in January on four counts of fraud and conspiracy but acquitted of defrauding patients.

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Davila sentenced Holmes to 11-1/4 years in prison at a hearing last month, calling Theranos a venture “full of lies, misrepresentations, plain hubris and lies.”

Prosecutors subsequently argued that Balwani should be sentenced to 15 years in prison, saying he knew Theranos’ tests were inappropriate for monitoring the company’s laboratory operations, and decided to “prioritize Theranos’ financial health over the actual health of patients”.

The probation office recommended a nine-year sentence.

Balwani’s lawyers asked for a sentence of probation, arguing that he sought to make the world a better place through Theranos and was not motivated by fame or greed.

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Once valued at $9 billion, Theranos promised to revolutionize how patients receive diagnoses by replacing traditional labs with tiny machines envisioned for use in homes, drugstores and even on the battlefield.

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

Case US Vs. Balwani, US District Court, Northern District of California, No. 18-cr-00258.

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

Our Standards: The Thomson Reuters Trust Principles.

Jody Godoy

Thomson Reuters

Jodi Godoy reports on banking and securities law. Contact her at [email protected]

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