Ramesh Balwani: Facts Leading To The Conviction Of Former Theranos President

Theranos was a privately held health technology firm founded by Ramesh “Sunny” Balwani’s then-girlfriend Elizabeth Holmes. Balwani served as its former president and Chief executive officer. Theranos claimed to have created a groundbreaking blood test that only required a very tiny amount of blood, such as that which can be drawn from a fingerstick.

Due to its dubious claims and procedures, Theranos began to face media scrutiny in 2015. In the end, the company was dissolved. Federal officials filed criminal charges against Balwani and Holmes for running the company as a multi-million dollar fraud operation against customers and investors. Holmes was found guilty and is now awaiting punishment. The trial for Ramesh Balwani got underway in March 2022.

Ramesh Balwani

Early Life

Ramesh Balwani was born in Pakistan to a farming family from the upper-middle class of Sindh. He went to Lahore’s prestigious boarding school Aitchison College. He remained there until 1984, pursuing an education reserved by the British colonialists for “youths of decent family.” Balwani can communicate in English, Hindi, and Urdu.

According to Ramesh Balwani’s personal attorney, the family eventually relocated to India because “being a Hindu in a largely Muslim country of Pakistan was really tough.” They later made their way to America. Ramesh Balwani enrolled in undergraduate studies at the University of Texas in Austin in the spring 1987 semester as an international student and joined the Pakistani Students Association while there. One of Balwani’s friends at the time remarked, “He was very patriotically Pakistani. He was one of us.” Ramesh Balwani left the university after 1991 to start a career; he would eventually earn a degree, but not until 1997, when he received a bachelor’s in information systems.

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The New York Times reported that it is unclear when or why he adopted the nickname “Sunny.” He used his given name, Ramesh, in official records from the late 1990s and divorce papers from 2002. He began signing documents at Theranos as Sunny Balwani in 2012.

Career

Ramesh Balwani worked for Microsoft and Lotus Software in the 1990s. Balwani worked in sales for Microsoft during his employment there. Despite his claims to have produced tens of thousands of lines of code, independent investigations were unable to confirm this, and several Microsoft managers who were questioned about him were unable to name him. He met Japanese artist Keiko Fujimoto at Microsoft, and they were married.

He began working as President for CommerceBid.com in late 1999. It was a software development firm that aided businesses in making purchases and sales through online auctions on the then-emerging Internet. Commerce One, another highly valued business development software company, bought the business in 1999. The entire acquisition was funded by shares, and Balwani joined the board of the new business.

Balwani made roughly $40 million from the sale of his Commerce One stock in July 2000, just before the dot com bubble burst and the company went out of business. He eventually returned to school and graduated from the University of California, Berkeley in 2003 with a Master of Business Administration. He continued in Stanford University’s graduate computer science program for an additional four years before quitting in 2008.

Ramesh Balwani, who was 37 at the time and enrolled at Berkeley, met Elizabeth Holmes, who was 18 and a senior in high school, while they were both students. Holmes attended Stanford University to obtain a degree in chemical engineering as a freshman, but she later quit to devote all of her attention to Theranos.

Working For Theranos

In 2009, Ramesh Balwani joined Theranos. As president of the corporation, he oversaw daily operations. Due to Balwani’s actions and the lack of medical professionals on the company’s board of directors, his lack of knowledge in biological sciences or medical equipment became problematic. Former Theranos employees regarded him as domineering, unyielding, and almost paranoid in his worry about industrial espionage.

Ramesh Balwani

Ramesh Balwani was well-known at Theranos for employing technical jargon that appeared to be beyond his comprehension in an effort to come off as more informed. “This invention, the Edison blood testing equipment is going to be well up there, um, with – with the discovery of antibiotics,” asserted Balwani at one point. He once misheard “end effector” as “endofactor” (a nonsense word), repeating the blunder throughout a conference and failing to notice when “Endofactor” was later used as a joke in a PowerPoint presentation. The end effector is the claw or other device at the end of an autonomous robot’s arm.

In October 2015, The Wall Street Journal published an article claiming that Theranos’ Edison blood-testing system gave erroneous medical diagnoses and results. A report published in March 2016 by the government Centers for Medicare and Medicaid Services confirmed that Edison devices routinely failed quality-control checks and gave wildly inconsistent findings (CMS). Theranos informed regulators in April 2016 that it had invalidated all test results from Edison machines for the years 2014 and 2015, as well as a few other tests it conducted on traditional machines.

Following a visit to Theranos’ Newark, California, laboratory, the CMS issued a warning letter to the company in January 2016. CMS officials suggested a two-year suspension of Ramesh Balwani’s ability to own or run a blood lab after the business failed to resolve issues with its California lab in March 2016.

Theranos is also accused of falsely claiming that its technology was being used in combat by the U.S. Department of Defense when in reality it had never been put to use. Another exaggeration was the assertion that a revenue stream worth $100,000 in 2014 was worth $100 million.

Ramesh Balwani’s Legal Proceedings

Ramesh Balwani’s attorneys have been attempting to set him apart from Elizabeth Holmes, his ex-girlfriend and business partner at the defunct blood-testing company Theranos, for months.

In January, Ms. Holmes was determined to have defrauded the startup’s investors. In his own fraud trial, Mr. Balwani is hoping for a different result.

Prosecutors, however, explicitly connected Mr. Balwani to Ms. Holmes and the Theranos deception that went on for years during their closing arguments to the jury on Tuesday. A text message Mr. Balwani wrote to Ms. Holmes in 2015 was shown by Jeffrey Schenk, an assistant U.S. attorney, and the case’s lead prosecutor. This text message was introduced as evidence during the trial.

“I am responsible for everything at Theranos,” Mr. Balwani wrote. “All have been my decisions too.” The text was an admission of guilt, Mr. Schenk said, adding, “He’s acknowledging his role in the fraud.”

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The trial of Mr. Balwani, which was virtually similar to Ms. Holmes’ trial last autumn, concluded with the presentation after more than three months of testimony. She and Mr. Balwani were accused in 2018 of falsely claiming that Theranos’s blood-testing equipment was more effective than it actually was and that the company was performing well. The two entered a not-guilty plea. Four of Ms. Holmes’ eleven counts led to her conviction.

The trial for Sunny Balwani, often known as Mr. Balwani, lacked the excitement surrounding Ms. Holmes’ case. It nevertheless serves as a conclusion to a passing phase of startup growth that frequently depended on exaggeration and hype. Among the few tech executives who have ever faced charges of fraud are Ms. Holmes and Mr. Balwani.

Mr. Balwani has pointed the finger back at Ms. Holmes, just as she attempted to place blame for the lies told about Theranos on others. His attorneys contended that numerous Theranos blood tests had been successful during the trial. According to them, Ms. Holmes and not Mr. Balwani were in charge of Theranos. And on Tuesday, they presented Mr. Balwani as a fervent supporter of Theranos’ mission and innovations.

Mr. Balwani “put his heart and soul into Theranos,” said Jeffrey Coopersmith, who represents him. “He worked tirelessly, year after year, to make the company a success.”

After Theranos came under scrutiny for making false claims regarding the accuracy of its blood tests, Mr. Balwani left the organization and separated from Ms. Holmes in 2016. The two were charged with fraud together, but Ms. Holmes claimed in court documents that the charges should be split apart and accused Mr. Balwani of sexual and emotional abuse. Dramatic testimony detailing the claims was presented during her trial. That topic wasn’t discussed at Mr. Balwani’s trial.

Prosecutors must persuade the jury that Mr. Balwani misled investors and patients about Theranos’s blood tests and business dealings in order to secure a conviction.

Theranos’ financial projections to investors and the state of its labs were both attributed by the prosecution to Mr. Balwani. Investors and employees who worked directly with Mr. Balwani rather than Ms. Holmes were among the new witnesses.

In one estimate given to investors in October 2014, Theranos was expected to earn $140 million. In actuality, earnings were $150,000. In his pitches to investors the next year, Mr. Balwani predicted revenues of around $1 billion. Evidence indicated that Theranos’ internal forecasts were substantially lower than reality, which came in at $429,210.

According to Mr. Schenk, Theranos’ executives had instructed its scientists to validate blood tests and launch public testing only when it needed money from investors or clients. He responded, “Not when the science was ready.”

Patrick Mendenhall, a new witness, who dealt with Mr. Balwani personally when investing in Theranos, explained the claims that turned out to be deceptive or untrue.

In Ms. Holmes’ trial, Brian Grossman, an investor at the hedge fund PFM Health Sciences, testified that Mr. Balwani had given his team financial predictions that vastly overstated Theranos’s expected revenue.

“When Mr. Balwani communicates with an investor, it’s for a purpose, and the purpose is to deceive them to get money,” Mr. Schenk said.

Additionally, the prosecution focused on Mr. Balwani’s management of Theranos’s lab, which the executive referred to in a 2014 text message as a “disaster zone.” Additionally, according to Mr. Schenk, Mr. Balwani would “eliminate dissent” by harassing or dismissing staff members who voiced objections about Theranos testing, such as Dr. Adam Rosendorff, a former lab director who testified in both cases.

The defense attorney, Mr. Coopersmith, argued that the government had presented a “very deceptive” image of Mr. Balwani’s time at Theranos and that it was inappropriate to present isolated private texts as proof of a plot.

According to Mr. Coopersmith, the texts didn’t reveal Mr. Balwani encouraging anyone to commit fraud. You’d think there would be a ton of nefarious talks going on if there were a conspiracy, but there aren’t, he claimed.

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James Mattis, a former defense secretary and Theranos board member, and Ms. Holmes, who had both testified in Ms. Holmes’ trial, were conspicuously absent from the witness stand. Mr. Balwani did not provide a defense witness statement.

Personal Life

Keiko Fujimoto, a Japanese artist, was his wife.  Ramesh Balwani and Fujimoto resided in San Francisco prior to divorce in December 2002.

While working at Theranos, Ramesh Balwani had a romantic involvement with Elizabeth Holmes. In 2002, when Holmes was 18 years old and still in school, they met. He was married at the time and 19 years older than Holmes.  Investors in Theranos were not made aware of their relationship.  Holmes testified at her trial that she had been raped while she was a Stanford student and that, following the assault, she had turned to Ramesh Balwani for support.

She further asserted that Balwani was very domineering throughout their lengthy romantic relationship, which lasted more than ten years, and that he physically and sexually abused her. Holmes said that Ramesh Balwani wanted to “destroy the person” she was and transform her into a “new Elizabeth” in her statement to the court. She later claimed, however, that Ramesh Balwani had not coerced her into making the false claims that had been alleged to have been made in the case to investors, business partners, media, and corporate directors. Ramesh Balwani and his ex-wife Fujimoto have “categorically” refuted charges of abuse in court documents, labeling them as “false and provocative.”

In the 2022 miniseries The Dropout, which explored his friendship with Holmes and his position inside Theranos, Naveen Andrews played Ramesh Balwani.

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