Theranos’ former chief operating officer Ramesh Balwani sentenced to nearly 13 years in prison for fraud

New York: Theranos’ former chief operating officer, Indian-origin Ramesh ‘Sunny’ Balwani, has been sentenced to nearly 13 years in prison for fraud that prosecutors said risked patient health and defrauded the blood testing company’s investors of millions of dollars.

Balwani, 57, of Fremont was sentenced Wednesday in California to 12 years and 11 months in federal prison for fraud that risked patient health by misrepresenting the accuracy of Theranos blood analysis technology and that defrauded the company’s investors of millions of dollars, US Attorney Stephanie Hinds said.

In addition to the 155 months prison term, US District Judge Edward Davila sentenced Balwani to three years of supervision following release from prison. A hearing to determine the amount of restitution to be paid by Balwani is to be scheduled in the future. Balwani was ordered to surrender on March 15, 2023, to begin serving his prison sentence.

Balwani was employed from September 2009 through July 2016 at the Palo Alto-based blood testing company founded in 2003 by his former girlfriend Elizabeth Holmes, once touted as Silicon Valley’s rising star.

Last month, District Judge Davila sentenced Holmes to 11 years and 3 months in federal prison and ordered her to surrender to begin serving her sentence on April 27, 2023. Balwani was 37 when he met then 18-year-old Holmes.

“There is an unfortunate saying in Silicon Valley – fake it till you make it,” Attorney Hinds said in a video statement.

Holmes and 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,” Hinds said adding that with Balwani’s sentencing, the court also made clear that his decision to deceive doctors and patients also put the health of patients at



risk.

Hinds said that while patient health is the highest priority of the US healthcare system, and Silicon Valley has long been home to healthcare start-ups that enhance the care of patients through technological developments, Balwani, in a desire to become a Silicon Valley titan, valued business success and personal wealth far more than patient safety.

“He chose deceit over candour with patients in need of medical care, and he treated his investors no better,” Hinds said in a statement.

Trial evidence showed that the fraud brought “spectacular personal wealth” to Balwani, who owned nearly 30 million shares of Theranos – over 6 per cent of the company – which were worth hundreds of millions of dollars at the peak of the fraud.

Balwani was born in Pakistan but his family is said to have moved to India. He moved to the US from India during the 1980s and studied at the University of Texas.

FBI Special Agent in Charge Robert Tripp said Balwani not only deliberately concealed defects in Theranos’ blood-testing technology to mislead investors, he knowingly put patients’ health at risk.

During his employment at the now defunct Theranos, Balwani held the positions of board member, chief operating officer and president.

Balwani and Holmes, who was chairperson and CEO, claimed Theranos developed a “revolutionary blood analyzer” that could run any blood test run by conventional labs using only a small blood sample drawn via a fingerstick, rather than the traditional draw from a vein.

Balwani and Holmes asserted that the Theranos proprietary analyzer produced results that were cheaper, more reliable and less variable than existing methods, and obtained results at a speed faster than ever before possible.