Ramesh Balwani is free on bond till further hearing. (file)
New York:
The chief operating officer of blood testing company Theranos, Ramesh ‘Sunny’ Balwani, has been found guilty by a federal jury in the US on all counts related to a multi-million dollar fraud scheme at a company once founded by his ex-girlfriend Elizabeth Holmes. Known as the rising star of Silicon Valley.
A federal jury in San Jose on Thursday convicted Pakistan-born Mr Balwani, 57, on two counts of conspiracy through a multi-million dollar scheme to defraud investors and patients in connection with operations in Theranos, United States, and telegraph Found guilty of 10 counts of fraud. Attorney Stephanie Hinds and Federal Bureau of Investigation (FBI) Special Agent in Charge Sean Ragan said in a statement.
After a trial that began in March this year before United States District Judge Edward J. Davila, the jury reached a verdict on Thursday after the jury found Holmes guilty of one count of conspiracy and three counts of wire fraud in related proceedings. Expired after 6 months. ,
“Six months after the guilty verdict in the Elizabeth Holmes trial, this jury has concluded that Holmes’ business partner, Ramesh Balwani, also bears responsibility for defrauding investors in Theranos. The jury concluded that Balwani had committed uninsured patients. Also cheated,” Hinds said.
Mr. Balwani is free on bond pending further hearing. Judge Davila set Balwani’s sentencing hearing for November 15, 2022, when he faces a maximum sentence of 20 years in prison for each count of conspiracy and each count of wire fraud, and a fine of USD 250,000, as well as restitution. faced.
He worked from September 2009 to July 2016 at a Palo Alto-based blood testing company founded by 38-year-old Holmes in 2003.
While working with Theranos, Mr. Balwani held several positions for the company as a member of the company’s board of directors, as its chairman and as its chief operating officer.
In the lawsuit, the government presented evidence that in Theranos, Mr. Balwani conspired to commit wire fraud against investors between 2010 and 2015, and conspired between 2013 and 2016 to commit wire fraud against patients who took Theranos blood. had paid for testing services, and that he had committed wire fraud against investors and patients.
On allegations of conspiracy, the government presented evidence regarding Balwani’s claims that Theranos had developed a revolutionary and proprietary analyzer, which the defendants referred to by various names, including TSPU, Edison or Minilab, the statement said. .
Mr Balwani and Holmes claimed that the analyst was able to perform a full range of diagnostic tests using tiny blood samples drawn from a finger stick. They also represented that the analyzer could produce more accurate and reliable results than those obtained with traditional methods – all at a faster rate than previously thought.
At trial, the government demonstrated that Holmes and Mr. Balwani knew that many of their representations about the analyst were false, but nevertheless conspired to convince potential investors and patients that the claims were true.
Holmes, Mr. Balwani and others knew that the analyzer had problems with accuracy and reliability, performed a limited number of tests, was slower than some competing instruments, and in some cases, could not compete with existing, more traditional machines. was.
Similarly, on allegations of genuine fraud, evidence demonstrated that Mr. Balwani used advertisements and solicitations to encourage and motivate patients to use Theranos’ blood testing laboratory services, even though he knew that Theranos was not able to consistently produce accurate and reliable results for some blood tests.
The statement said evidence showed Mr. Balwani represented investors that Theranos would generate and break even more than $100 million in revenue in 2014 and that Theranos was expected to generate nearly $1 billion in revenue in 2015. was expected.
However, in reality, Theranos used conventional machines purchased from third parties to do most of Theranos’ blood tests and Mr. Balwani knew the company would generate only negligible or modest revenue in 2014 and 2015.
Evidence at trial included multiple misrepresentations by Mr. Balwani to potential investors about Theranos’ financial position and its future prospects.
Evidence showed that Mr. Balwani represented investors that Theranos would dramatically increase the number of wellness centers within Walgreens stores, even though the retail Walgreens rollout of Theranos was halted due to a number of issues.
In July 2020, a federal grand jury returned an encroachment charge accusing Mr. Balwani of two counts of conspiracy to commit wire fraud and ten counts of wire fraud.
Like Holmes, Mr. Balwani was charged with conspiracy to commit wire fraud against investors in Theranos during the period 2010 to 2015, wire fraud against patients who paid for Theranos’ blood testing services during the period from 2013 to 2016. was accused of conspiracy. wire fraud.
Six of the wire fraud cases involved fraud against investors in Theranos, while the remaining four involved wire fraud against patients who paid for Theranos’ blood testing services and advertising purchased by Theranos to attract those patients. did. In Thursday’s verdict, Mr Balwani was found guilty on all counts.
In a separate trial, a separate jury indicted Holmes on January 3, 2022, on three counts of investor-related conspiracies and wire fraud.
That jury acquitted Holmes of conspiracy wire fraud counts and three additional wire fraud counts related to the patient; In addition, one count of wire fraud involving a Theranos patient was ruled out during Holmes’ trial.
The jury could not reach a unanimous verdict in his trial regarding three investor fraud-related cases. Judge Davila set Holmes’ sentence on September 26, 2022.
Ragan said the jury has determined that the fraud in Theranos has reached the level of “criminal conspiracy.”
“The FBI has spent years investigating this investment fraud scheme … Lies, deceit and criminal action cannot replace innovation and success,” said FBI in-charge Ragan.
(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)