SAN JOSE, Calif. – In the final chapter of the Theranos saga, Ramesh “Sunny” Balwani, the company’s former chief operating officer and ex-boyfriend of founder Elizabeth Holmes, was found guilty of all 12 criminal fraud charges.
Balwani had no reaction as the verdict was read at the U.S. District Court in San Jose, California and stared straight ahead at Judge Edward Davila. Balwani’s family members could be seen consoling him, and his two brothers were by his side.
Jurors deliberated for five days. Balwani, 57, sat masked next to his defense attorneys, and shifted in his seat as the judge reviewed the verdict.
Jurors heard from 24 government witnesses, who painted Balwani as an accomplice to Holmes.
Balwani’s sentencing date has not yet been set. Each wire fraud count carries a maximum sentence of 20 years in prison and the conspiracy count carries a maximum of five years. Legal experts expect Balwani will appeal.
The trial began on March 22 and experienced several delays due to the pandemic. Jurors heard from 24 government witnesses who painted Balwani as an accomplice to his ex-girlfriend and Theranos CEO, Holmes.
Prosecutors alleged Balwani conspired with Holmes in a decade-long scheme to bilk hundreds of millions of dollars from investors and patients in an effort to keep the struggling company afloat. According to prosecutors, Balwani oversaw Theranos’ grossly inflated financial projects, the lab operations and a doomed Walgreens deal. Theranos promised to revolutionize blood testing by making it cheaper, faster and less painful than traditional lab tests.
“Balwani is not a victim,” Assistant U.S. Attorney Jeffrey Schenk said in his closing argument. “He is a perpetrator of the fraud… Mr. Balwani knows that the biggest threat to fraud is the truth.”
Balwani’s legal team called two witnesses: an Arizona physician who used Theranos blood analyzers and an information technology consultant who testified about a missing database, the Laboratory Information System, that contained patient test results. Balwani, unlike Holmes, did not testify in his own defense.
In January, a separate jury found Holmes guilty of three counts of criminal wire fraud and one count of conspiracy to commit wire fraud against investors. The jury acquitted her on charges related to defrauding Theranos patients. Holmes remains on bail while she awaits her sentencing in September.
The former Silicon Valley executives raised nearly $1 billion from powerful investors including media mogul Rupert Murdoch, Oracle co-founder Larry Ellison, Silicon Valley investor Don Lucas, Walmart’s Walton family and the family of former Secretary of Education Betsy DeVos.
Holmes and Balwani also attracted notable names to their board of directors including former Secretary of Defense James Mattis, former Secretary of State Henry Kissinger and former Senator Sam Nunn. At its peak, Theranos was valued at over $9 billion and Balwani’s stake was worth $500 million.
In a marathon 12-hour closing argument that spanned over three days, Balwani’s legal team blasted government witnesses and called their case “incomplete.”
“Mr. Balwani put his heart and soul into Theranos, he worked tirelessly year after year to make the company a success,” Jeffrey Coopersmith, a defense attorney for Balwani said, and later added, “the government hasn’t proved Mr. Balwani tried to deceive or cheat anybody.”
Coopersmith asked the jury to consider why prosecutors didn’t call certain employees, investors and board members to the stand, including four DeVos family members who invested in Theranos.
“They invested $100 million,” Coopersmith said. “You’d think they’d be bothered to come to testify, but we didn’t hear from them.” Lisa Peterson, the DeVos family wealth manager, testified in the trial on behalf of the family.
Balwani’s attorneys argued that he acted in good faith and truly believed in the capabilities of the blood-testing technology, but former employees told CNBC that Balwani was aware of the problems and created a toxic environment at Theranos.
In a July 2015 text message earlier obtained by CNBC and read aloud in court by the government, Balwani wrote to Holmes: “I am responsible for everything at Theranos. All have been my decisions too.”
“He’s acknowledging his role in the fraud,” Schenk said referencing the text message.
Correction: The story’s headline was updated to reflect that Balwani is the COO of Theranos.