Ramesh “Sunny” Balwani, a feisty technology executive, was found guilty on 12 counts of fraud for his part in misleading investors and clients about the groundbreaking technology promises of blood-testing startup Theranos.
Ten counts of federal wire fraud and two counts of conspiracy to commit wire fraud against Balwani, 57, for his involvement at Theranos, a blood-testing business founded by disgraced founder Holmes when she was only 19 years old, were decided by a jury in San Jose, California over the course of two weeks.
Before finding him guilty on all 12 charges, they carefully considered the testimony, emails, lewd messages, and other evidence presented throughout the three-month trial.
‘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.’
The maximum punishment for each of the 10 counts of wire fraud is twenty years in prison; the maximum term for the conspiracy counts is five years.
Balwani moved over to his two brothers, who were seated behind him, for what seemed to be a somber talk after the findings were read and the jury was gone. The three were silent, their heads down.
In a separate trial, Holmes, who dated Balwani while they ran the bankrupt business, was found guilty on merely four charges of fraud and now faces up to 20 years in jail.
Around the same time that Holmes, who is now 38, left Stanford University in 2003 to launch her firm, Balwani started dating Holmes.
He assisted Holmes in the background until 2010, when he moved in with Holmes and became the company’s COO.
Balwani later took control of the blood-testing facility that was producing the false results and arranged a deal with Walgreen’s for his business’ deceptive “Edison” gadget.
In 2016, when Theranos started to fall apart due to discoveries about major issues with their technology that they had kept from investors and clients, the couple separated.
24 government witnesses who said that Balwani was a key conspirator in the plan were eventually called by the prosecution.
However, during the 12-hours of closing arguments, Balwani’s defense, who are anticipated to seek an appeal, said that the government’s case was lacking several key details.
‘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. ‘The government hasn’t proved Mr. Balwani tried to deceive or cheat anybody.’
Prior to condemning Holmes on four charges of investment fraud and conspiracy and clearing her on four counts of patient fraud and conspiracy earlier this year, a different jury spent seven days debating the evidence in her fraud trial.
A court planned for late September will determine her punishment, which may be up to 20 years in jail.
Despite being informed of Holmes’ conviction, the jury in Balwani’s case has been instructed not to take it into account while making their decision.
During Holmes’ fraud trial, over 600 pages of private text conversations were disclosed, revealing their opulent way of life, including scheduling visits to Las Vegas with reservations at three-star Michelin restaurants and thousand-dollar motels.
Other texts ranged from the mundane: business meetings, staff attendance, internal complaints, flight details and updates on their pet fish, to romantic love overtures: ‘This is our year,’ wrote Holmes, ‘We can never forget it tiger… for our kids never forget who we are.’
In another thread from May 2015, Holmes says, ‘You are breeze in desert for me. My water. And ocean … Meant to be only together tiger.’
She added: ‘Madly in love with you and your strength.’
Balwani’s texts were equally effusive: ‘Infinite love for you in every breath,’ he wrote in April 2016.
‘You are breeze in desert for me. My water. And Ocean,’ read the messages from Holmes to Balwani in May 2015, which were released during her trail
In another message from July 2015, Balwani tells Holmes to ‘be strong’ and that he loves her
Balwani’s work and personal history is mostly unknown, as is the origin of the moniker “Sunny.” Despite being a software entrepreneur, he has practically little digital imprint and is still a virtual ghost.
On June 13, 1965, Balwani was born in Pakistan. Balwani earned his bachelor’s degree in information systems from the University of Austin Texas before his family finally emigrated to the US.
At the height of the dot-com boom in 1999, he joined a start-up named CommerceBid.com as president after working as a sales manager for Microsoft and Lotus Software.
With a net fortune of $4.5 billion, Forbes named Holmes the world’s youngest self-made billionaire in 2014 when she was just 30 years old.
The business-to-business auctioning platform CommerceBid was purchased by $20 billion publicly traded company Commerce One in 2002 for $225 million. Balwani gained $40 million from the deal, but the dot-com bubble burst and the company lost all of its value.
The New York Times described it as “a typical dot-com rags-to-riches-to-rags scenario.”
Balwani enrolled in graduate management school in 2002 after divorcing his Japanese artist wife.
It was around that time that he first met Holmes in Beijing as part of a summer Mandarin immersion program. Holmes was only 18 at the time and about to enter her freshman year at Stanford University, Balwani was 37.
During her trial at the end of 2021, Holmes told the jury: ‘I talked to him about wanting to start a company, and a company that I tried to build in high school, and I asked for his advice.’
The pair became romantically involved not long after Holmes dropped out of Stanford in the fall of 2003 to find Theranos at age 19. By 2005, Holmes had moved into Balwani’s Palo Alto condominium.
From the shadows, Balwani advised his girlfriend on how to run Theranos. Early employees said his presence was felt from behind the scenes, and that it was common for Holmes to begin sentences with ‘Sunny says.’
He officially joined the company in September 2009 as President and Chief Operating Officer, in spite of having no experience in medicine or lab testing. By that time, Theranos had burned though $47 million in seed money, and was on the brink of bankruptcy. Balwani kept things afloat with a personal $13 million investment.
‘The company was low on cash, and I knew of the mission and that what the company was trying to do was paramount and I offered to help the company and I ended up giving a $13 million personal loan,’ said the former software executive, said in court testimony obtained by The Dropout podcast. ‘It was interest-free. It was a good-faith loan.’
Elizabeth focused on being the company’s public face while Balwani focused on managing everyday backend operations. On its board of directors, they had a number of former government officials and billionaires.
Balwani was a turbulent manager with a severe, combative, and unbending management style. He quickly developed a reputation as Holmes’ vicious “enforcer” who “terrorized” employees by promoting a workplace filled with suspicion, dishonesty, intimidation, and threats.
Balwani “took to sacking individuals so frequently that it gave rise to a new verb inside the company: to “remove” someone,” writes John Carreyrou in the Wall Street Journal.
Employees at Theranos used the term to describe someone who had been fired. “Sunny vanished him,” they would remark.
The couple purchased a five-bedroom, seven-bathroom house in the tony suburb of Atherton in 2013. They created a limited liability company (LLC) to purchase the $9 million residence which was named ‘HMFR.’
According to a court document, those initials stood for a prayer in Arabic that the couple often recited; the prayer translates to ‘This too is my God’s glory,’ explained Holmes.
Later, after they broke up, Balwani bought out Holmes, who owned a 50% stake in the LLC, for $7.9 million in 2018. He sold the 6,800-square-foot property this past January for a whopping $15.8 million.
Balwani didn’t testify in his own defense, in contrast to Holmes, who testified for seven days during her trial.
In one crucial way, Balwani’s explanation echoed Holmes’s: Both painted the two as devoted employees who had such a strong faith in Theranos’ science that they never sold their individual shares in the Palo Alto, California-based business.
Holmes’ net worth was pegged at $4.5 billion at one point in 2014, while Balwani’s Theranos interests were worth $500 million.
But in late 2015, when a series of shocking articles in The Wall Street Journal revealed widespread issues with Theranos’ technology, everything started to fall apart.
By May 2016, Holmes had dumped Balwani as her business and romantic partner. Holmes is now the mother of an infant son fathered by her current partner, Billy Evans, who was by her side through most of her trial.