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In dueling sentencing memorandums filed late Wednesday night, lawyers for convicted Theranos executive Ramesh “Sunny” Balwani told a federal judge that their client should be put on probation and not serve any prison time.
Balwani was convicted of 12 counts of wire fraud and conspiracy based on his role in selling investors and patients on Theranos’ malfunctioning blood-testing technology.
Prosecutors argued that the extent of the fraud and the need to “promote respect for the law” merit a prison term of 15 years.
Both sides referenced the recent sentencing of Balwani’s co-conspirator and former lover, Theranos founder and CEO Elizabeth Holmes, in their filings with the court.
U.S. District Judge Edward Davila, who presided over both trials, sentenced Holmes to more than 11 years in prison, despite her lawyers’ request for a maximum sentence of 18 months of house arrest.
But Balwani, his lawyers argued, “is not the same as Elizabeth Holmes: he actually invested millions of dollars of his own money; he never sought fame or recognition; and he has a long history of quietly giving to those less fortunate (dating to well before his time at Theranos) without seeking recognition or benefit.”
The memorandum continued: “There are truly evil people in this world who take pleasure in defrauding vulnerable people. There are also those who try to make the world a better place, even if they still engage in conduct that a jury finds violated those statutes.”
Balwani, the lawyers said, falls into the latter category: He “did not profit, nor did he try to profit,” from his fraudulent conduct. Instead, he “worked day and night to build a company that he thought would change the landscape of diagnostic testing for the better.”
Prosecutors in their filing equated Balwani’s role in the Theranos scandal with that of Holmes: “Balwani, with Holmes, was an equal participant in Theranos’ efforts to quash the truth about its technology’s limitations and failings.”
Although Holmes and Balwani both touted the technology as able to run more than 200 blood tests based on a single drop of blood, prosecutors said, the evidence showed that at most the Theranos system could provide results only for 12 types of blood tests, and those only “with serious accuracy problems.”
They argued that even if the judge applied the same analysis he did in the Holmes case — a calculation that yielded a term of 135 months — a longer term is warranted for Balwani because he was convicted of all 12 counts of the same indictment brought against Holmes, including “additional substantive fraud counts involving patients.”
Holmes was convicted of only four counts, all related to investors, and acquitted of four counts related to patients. (In the Holmes trial, an additional patient count was dismissed due to a procedural issue with the prosecution’s case, and the jury deadlocked on three of the investor charges.)
Balwani is scheduled to be sentenced in federal court in San Jose on Dec. 7.
I can only hope that the judge has read John Carreyrou’s book Bad Blood, which chronicles the multi-billion-dollar Theranos fraud, — he biggest fraud in Silicon Valley history. Carreyrou is the Wall Street Journal investigator who revealed the extent of the fraud before Holmes and Balwani were able to sucker Walgreens into installing their entirely defective equipment into thousands of stores.
Had Walgreens installed these bogus devices, as planned by Holmes and Balwani, the consequences — millions of misdiagnoses — would have been horrific.
I’ve read Bad Blood, but you don’t have to read the book to know this is who they really need to go after. Yes, they were partners in crime, two con artists. He’s the mastermind. A married man 20 years her senior who took control of her, her company and he used her for financial gain (ill-gotten gains) and he used her for something else. If you’re a very perceptive person, you’ll easily read between the lines as to what was really going on, and who was in control. As the jurors said, it’s “irrelevant.”
Balwani was convicted for defrauding patients. Holmes wasn’t. She’s hardly innocent, but controlling, abusive, manipulative men are out there. And women need to be on guard, and not fall into their trap.
The fraud perpetrated by Theranos executives could have resulted in thousands of patients who would have relied on their technology dying. To my mind, this is not white collar crime (which deserves greater punishment than it usually gets). It is intent to murder. These morally bankrupt people belong in jail.
@Jennifer
Since you’ve read Bad Blood, you know that much of it is based on whistleblowers Tyler Shultz and Erica Cheung. In their telling, Holmes was the charismatic boss, who went after Tyler ruthlessly, attempting to destroy his life when he told Carreyrou what was happening at Theranos. Holmes and Balwani were joined at the hip, both having “antisocial personality disorder” characterized by being manipulative, dishonest, narcissistic, unremorseful, non-empathetic, and exploitative.
Tyler’s grandfather, George Shultz, was so taken with Holmes’s manipulations that for years after Tyler exposed the fraud, he refused to believe his grandson. To get a feeling for how manipulative and slick and seductive people like Holmes are, you can watch her interviews on YouTube, or even better, watch Frank “Catch Me If You Can” Abagnale https://www.youtube.com/watch?v=vsMydMDi3rI talk about his life of deception.
“These morally bankrupt people belong in jail.”
Yet here they are appealing their convictions to delay going to jail and/or demanding no jail time, just probation. As Holmes allegedly said, “Pretty people like me don’t go to jail” and now the judge is proving her right by considering sending her to Club Fed instead.
Holmes was the boss, and I believe Balwani was yanking her chain the whole time. They were partners in crime, but without Balwani I don’t believe Holmes could’ve pulled this off by herself.
I have read Frank Abagnale’s book “Cath Me If You Can.” I also saw the movie and saw Abagnale on “To Tell the Truth.” I correctly guessed if he was #1, #2 or #3 after reading the book. Abagnale was a man, and this is a “man’s game.” This isn’t breaking news.