Unlike CEO Elizabeth Holmes, Balwani was also charged with defrauding patients
Former COO . from Theranos and ex-boyfriend of disgraced founder Elizabeth Holmes, Sunny Balwani has been found guilty of all 12 criminal charges after a three-month trial.
In her own high-profile trial this winter, Holmes was found guilty of investor defrauding and conspiracy to defraud investors on four out of 11 counts, though she was found not guilty of patient defrauding. However, this jury found Sunny Balwani guilty of defrauding both investors and patients, and conspiracy to defraud them.
As anyone who has seen the fictional Hulu series “The Dropout” knows, Theranos aspired to run dozens of tests on a single drop of blood, which would have revolutionized healthcare. But despite reaching a valuation of $10 billion and spending more than a decade on development, Theranos’ technology never really worked, and in the most egregious cases, patients were shown dangerously false medical results. In one case, a mother with a history of miscarriage was incorrectly informed that she would have another failed pregnancy. Another patient, Erin Tompkins, took Theranos for its low cost, was classified HIV positive, and then lived in limbo for three months until she could afford a second blood test. She didn’t actually have HIV.
Now Balwani will be held responsible for what happened to Tompkins, as well as a patient Mehrl Ellsworth, who was given a false diagnosis of cancer.
Holmes and Balwani would be tried together for fraud, but the former CEO filed for a separate trial, stating that Balwani – who is 20 years her senior – had emotionally and sexually abused her. Although the court will not rule on those allegations, the judge granted the request.
During the trial, Balwani’s lawyers attempted to claim that although he was an investor and director at Theranos, he was not involved in the key decision-making process. But that’s a tough argument for a jury that saw a text from Balwani to Holmes that read, “I’m responsible for everything at Theranos.”
In her own trial, Holmes’ defense tried to blame Balwani for the company’s colossal failure. She herself took the stand — a rarity in anyone’s own criminal fraud trial — to detail their relationship. Holmes described that Balwani had so much control over both her and her business that he micro-managed her daily schedule, including how she dressed and what she ate.
Balwani’s trial contained the same evidence that Holmes had charged. The prosecution focused on a key piece of evidence regarding Theranos’ relationship with Walgreens. The biotech startup’s faulty technology made its way into 41 Walgreens stores, but unbeknownst to the pharmacy giant, most of the testing was done on third-party equipment. Theranos’ own machines could not produce accurate test results, so many patients had blood drawn, not with a fingerstick but intravenously. So, Walgreens basically spent hundreds of millions of dollars redesigning stores for Theranos “wellness centers” just to let the startup use the same old technology.
Despite claims by Balwani’s attorneys to the contrary, a Walgreens executive testified that he worked closely with Balwani on the deal. The prosecution also showed evidence of a text message from Balwani to Holmes stating that he deliberately failed to tell Walgreens that they were using different machines.
The Holmes jury took seven days to deliberate, but the Balwani jury reached a decision on the fifth day of deliberation. Both former Theranos executives are awaiting sentencing.
This story develops…