While the youngest billionaire Elizabeth Holmes was found guilty of defrauding investors as founder and CEO of US healthcare company Theranos, her partner and the company’s chief operating officer, Ramesh ‘Sunny’ Balwani now faces his own fraud trial on the same charges, which is set to begin in February.
Indian-born Balwani was Holmes’ “secret boyfriend”.
“They met when Holmes was 18 and Balwani was 37 – she moved in with him the year after he dropped out of Stanford. She also said during the trial that she was raped while a student at Stanford, which is part of why she didn’t complete her degree,” TechCrunch reported.
During the four months of legal proceedings, Holmes detailed Balwani’s controlling behavior, including a written document that dictated her daily schedule, including what she ate, when she slept and how she dressed.
She said: “He was so disappointed in my mediocrity and he was trying to teach me how to be better.”
Holmes founded Theranos in 2003 and the company was once valued at over $9 billion. In 2015, an expose in the Wall Street Journal revealed major issues with Theranos’ technology. In 2018, Holmes and Balwani were charged with two counts of conspiracy to commit wire fraud and nine counts of wire fraud.
According to the indictment, the charges stem from allegations that Holmes and Balwani engaged in a multimillion-dollar scheme to defraud investors and a separate scheme to defraud doctors and patients.
Both programs involved efforts to promote Theranos, a company founded by Holmes and based in Palo Alto, California. Theranos was a private healthcare and life sciences company with a stated mission to revolutionize medical laboratory testing through supposedly innovative methods for drawing blood, testing blood, and interpreting the resulting patient data. .
According to a Department of Justice press release, Holmes and Balwani used advertisements and solicitations to encourage and entice doctors and patients to use Theranos blood laboratory services, even though, according to the government, the defendants knew that Theranos was unable to consistently produce accurate results. and reliable results for certain blood tests.
“It is further alleged that tests performed on Theranos technology were likely to contain inaccurate and unreliable results,” the statement said.
Holmes and Balwani defrauded doctors and patients by misrepresenting Theranos’ ability to provide accurate, fast, reliable, and inexpensive blood tests and test results, and omitting information about limitations and issues technologies from Theranos.
Defendants knew that Theranos was unable to consistently produce accurate and reliable results for certain blood tests, including tests for calcium, chloride, potassium, bicarbonate, HIV, Hba1C, hCG, and sodium.
However, they explicitly represented to individuals via advertisements that Theranos blood tests were cheaper than blood tests at conventional labs to entice individuals to purchase their blood tests.
The indictment alleges that the defendants used a combination of direct communications, marketing materials, media statements, financial statements, models and other information to defraud potential investors.
In a big twist on the high-profile lawsuit, Holmes took to the stage herself to say her failure as a startup founder doesn’t mean she committed fraud.
“At a key point, Holmes alleged that Theranos COO Ramesh ‘Sunny’ Balwani abused her,” the TechCrunch report said.
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