A jury on Thursday convicted former Theranos executive Ramesh “Sunny” Balwani of collaborating with disgraced Theranos CEO Elizabeth Holmes in a massive fraud involving the blood-testing company that once enthralled Silicon Valley.
The dual convictions representing a resounding victory for federal prosecutors, who seized on the Theranos case as a rare opportunity to hold ambitious entrepreneurs accountable for engaging in technological hyperbole while pursuing fame and fortune. In the process, they hoped to discourage the practice of making bold and unproven promises about still-nascent products -- a startup strategy known as “fake it until you make it.
After the verdicts were read and the jury was dismissed, Balwani walked over to his two brothers who were sitting behind him for what appeared to be a solemn discussion. The three sat quietly, heads bowed. While Holmes insinuated during her trial that Balwani manipulated her into making poor choices, Balwani’s lawyers explicitly sought to shift all the blame for any misconduct squarely on Holmes.As part of Balwani’s defense, the lawyers pointed out that Holmes was not only CEO, but also a Silicon Valley star who persuaded investors to pour nearly $1 billion into Theranos.
But it turned out that the Edison never worked properly, providing faulty test results that Theranos conducted as part of a deal to set up mini labs in Walgreen’s pharmacies. The flaws in Theranos’ vaunted technology prompted Holmes and Balwani to shift their testing to conventional machines made by other vendors and while drawing vials of blood from patients’ veins — a far cry from Holmes’ promises.
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