“Ramesh Balwani, in a desire to become a Silicon Valley titan, valued business success and personal wealth far more than patient safety. He chose deceit over candor with patients in need of medical care, and he treated his investors no better. Today’s sentence should serve as a lesson to anyone considering fraud in their own push for success.”
That was the statement U.S. Attorney Stephanie M. Hinds put out through her office on December 7 after Balwani, the former chief operating officer of failed blood testing company Theranos, was sentenced to just shy of 13 years in prison for his role in a well-publicized fraud scheme.
In the scheme, Ramesh “Sunny” Balwani and former Theranos CEO Elizabeth Holmes duped investors and others into believing their company’s blood testing technology was faster, cheaper, and more accurate and reliable than it actually was, deceiving investors out of “hundreds of millions of dollars,” according to the statement from the U.S. Attorney’s Office of the Northern District of California. In reality, the “analyzer performed only a few basic tests and was slower than existing devices.” Theranos even had to resort to using third-party technology to perform its tests, a fact the company concealed from the public and investors.
Worse than that, despite protests from Theranos staff, the company offered its faulty technology to patients for testing, leading to “numerous misdiagnoses,” the U.S. Attorney’s Office states.
“Patients and their doctors rely on accurate, reliable test results to ensure a proper diagnosis of their condition. When individuals jeopardize patient health and put profits above the public health, the FDA will continue to investigate and bring them to justice,” said FDA Assistant Commissioner for Criminal Investigations Catherine A. Hermsen in the U.S. Attorney’s Office press release.
For his role in the fraud scheme, Balwani was convicted of all 12 fraud charges he faced in July 2022, while Holmes was only found guilty of four of the 11 charges she faced relating to the scheme, thus receiving a slightly lighter sentence of just over 11 years in prison, followed by three years of supervised release. Balwani also faces three years of supervised release after his time in prison. He is required to begin his prison term on March 15, 2023, and must also pay a yet-to-be-determined amount in restitution.
To learn more, see the news report on G2 Intelligence, a partner brand of Today’s Clinical Lab.