Former Theranos President Found Guilty of Fraud

Sunny Balwani, the former president and chief operating officer of bankrupt blood-testing company Theranos, on Thursday was found guilty of 12 counts of conspiracy and fraud against certain investors and patients.

• It’s a similar verdict to one handed down in January to Theranos founder and ex-CEO Elizabeth Holmes, who once dated Balwani.

Why it matters: Balwani isn’t a household name like Holmes, but he was instrumental in building a billion-dollar house of cards that duped both investors and patients.

Courtroom drama: Balwani’s attorneys tried to pin the blame for Theranos’ failures on Holmes, much as her attorneys had tried to blame Balwani.

• As we wrote when the trial began: Holmes tried to thread an incredibly narrow rhetorical needle, denying the existence of fraud while also redirecting blame. Balwani seems to be attempting something similar; claiming he was a savvy executive with lots of past success, but also a naif who was bamboozled by Holmes.
• But prosecutors, who originally wanted to try the pair together, often used Balwani’s own words against him. For example, they presented a text message from Balwani to Holmes that read: “I am responsible for everything at Theranos.”
• One big difference between the trials, however, was that Balwani didn’t testify in his own defense.

Details: Balwani was convicted on all 12 counts brought against him, after nearly five days of jury deliberations. This includes a wire fraud charge related to a $100 million investment in Theranos from the family of former U.S. Education Secretary Betsy DeVos.

• Holmes had been convicted on four of seven counts, each one related to investors and carrying a maximum sentence of 20 years in prison.

Look ahead: Expect Balwani to appeal the verdict, as Holmes already has done.