iNDICA NEWS BUREAU
A top executive of Theranos, Ramesh “Sunny” Balwani, has been found guilty of committing 12 counts of fraud during his stint in the healthcare startup company.
On Thursday, a jury found Balwani guilty of defrauding investors and patients of Theranos after he joined the company in 2009. The company had claimed that it has the technology to operate a machine that could run dozens of blood tests with just a few drops of a patient’s blood and detect a number of diseases.
The company came under the federal regulators’ scanner after a Wall Street Journal expose in 2015 reveled that the company’s tech could not carry out the multiple blood tests with one drop of blood, as it had promised. Its labs shut down in 2016.
Balwani, who was a business partner of Theranos, and his romantic interest Elizabeth Holmes, who set up the firm in 2003, were initially charged for fraud together. But, in 2020, when Holmes accused Balwani of emotional and sexual abuse, a federal judge separated their trials. In her trial Holmes had blamed Balwani for all the problems at Theranos, while at Balwani’s trial his lawyers claimed that Holmes was running the company.
The Verge reported that the prosecutors disputed Balwani’s claim and said that he too had played a role by pointing to an evidence – a text message from Balwani to Holmes that read “I am responsible for everything at Theranos”. Balwani and Holmes had started dating after she had started the company.
Earlier in January, Holmes had been convicted on four out of 11 counts of frauds each of which can sentence her for a maximum of 20 years in prison. While Holmes in awaiting sentencing, she had tried shifting all blame to Balwani and asked a judge to overturn her conviction in May. Her lawyers told the court that Balwani had allegedly mislead investors by lying to the company’s investors about the financial status of Theranos and overstating its revenues. Similar accusations were made against Holmes as Balwani’s lawyers charged her with controlling Theranos and providing false blood-testing tech data.
The Verge, reported that Theranos was established by Holmes in 2003. In 2010, a year after Balwani joined the company, its value was estimated at $1 billion. Just 4 years later, Theranos had allegedly raised $400 million as its valuation shot up to $9 billion.
But, by 2015 the company faced a downturn as it was criticized for not publishing its research in peer-reviewed journals and then it got exposed by a number of investigative news reports. More trouble followed as one of the associates of Theranos lab, Erika Cheung, reported to the federal authorities that the company’s much-touted blood testing machine called Edison was not reliable and count not be used on human patients.
A year later, in 2016, Theranos was accused by the U.S. Centers for Medicare & Medicaid Services (CMS) of jeopardizing its patients’ health and safety by not following its own quality control guidelines. This was followed by Walgreens ending its partnership with Theranos. In 2017, following an agreement with CMS, the company stopped its blood-testing business for two years. In 2018, after Balwani and Holmes were charged with 11 counts of fraud, the company shut down.
