No. 2 Theranos Executive convicted of 12 fraud charges

San Jose, Calif .—Ramesh Balwani, former CEO of Theranos, was convicted of 12 fraud charges with a stricter verdict than his conspirator Elizabeth Holmes. -Startup testing as the ultimate Silicon Valley warning story.

Balwani and Holmes, who promised to revolutionize health care and soared Theranos, are the most prominent technical executives charged and convicted of fraud across generations. Five male and seven female jury trials took 32 hours to convict Mr. Balwani, known as Sunny, for all 10 wire frauds and two conspiracies.

Holmes was convicted of four fraud charges and four acquittals in January. The other three accusations were dismissed after the jury failed to reach an agreement. She has appealed to the verdict and is expected to do the same for Mr. Balwani.

In both cases, it depended on whether Theranos’ blood testers exaggerated their ability to appeal to investors and customers when the product didn’t really work.

Each count can be imprisoned for up to 20 years. Mr. Balwani and Mr. Holmes will be sentenced together in September.

When convicted, Barwani, 57, who appeared in court in a black suit and blue medical mask, briefly stared at the jury and then turned his gaze straight.

Double convictions are a rare example of a Silicon Valley hype could go to jail. Since Theranos collapsed in 2018, the company has become an abbreviation for Business Glyphter, and the world has a greedy desire for a nasty startup ascending and descending story, including WeWork’s disastrous first public attempts and tricks. Of the developed Ozy media. But Theranos was the only person to bring criminal accusations. The result could send a message to entrepreneurs who are exaggerating in the name of innovation.

The ruling showed that the jury was upset by the prosecutor’s evidence that Mr. Barwani knew about Seranos’ technical and business issues while he was fooling investors and patients. Balwani sought to distract the criticism by claiming that Theranos CEO and Founder Holmes was responsible, and that he believed in Theranos’ mission and technology.

“I poured his heart and soul into Theranos,” Balwani said in closing arguments, Balwani’s lawyer, Jeffrey Coopersmith. “He made a tireless effort every year to make the company a success.”

Evidence from the trial, including text messages, emails, and testimony from 24 witnesses, showed that Mr. Balwani was deeply involved in and aware of the problem in almost every aspect of Theranos’ business. He led the lab, prepared financial forecasts, presided over personnel issues, and attended many pitch meetings with investors.

“Mr. Balwani wants you to think he’s a victim,” he said. “Mr. Balwani is not a victim — he is a fraudster.”

A decision was made during the harsh awakening of the tech industry as stock prices soared amid rising interest rates, rising inflation and economic uncertainty. Investors burned out by the sale stopped chasing high-risk, money-losing startups and urged many Silicon Valley companies to reduce staff and delay aggressive expansion plans. In a humble moment, many predict the end of a decade-long boom in tech start-ups.

Balwani and Holmes took advantage of the era of go-go optimism towards Theranos. When Holmes was 18, they met and started dating secretly shortly after she created a startup. Balwani joined the company in 2009 and invested in it.

As Chief Operating Officer of Theranos, he played a behind-the-scenes role in the rise of the company. He helped Holmes grow an image like Steve Jobs, run a lab, help raise money, and push the company to a $ 9 billion valuation.

The Wall Street Journal’s 2015 Exposé upset the company by revealing that Theranos lied about blood tests. Balwani quickly resigned and the startup failed in 2018. That year, he and Holmes were charged with fraud.

Each defendant was frequently discussed in the trials of the other defendants, but neither testified to the other defendants. Holmes accused Balwani of emotional and sexual abuse, but these accusations were not found as evidence of his trial.

“The story of Theranos is a tragedy,” prosecutor Schenck said in closing arguments.

Kalley Huang Report that contributed.

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