Theranos exec Sunny Balwani sentenced to 13 years in prison

https://techcrunch.com/2022/12/07/theranos-exec-sunny-balwani-sentenced-to-13-years-in-prison-for-defrauding-patients-and-investors/

by coloneltcb • 4 years ago

158 106 4 years ago

techcrunch.com

dmix9• 4 years ago

I'm happy he got even more than Holmes (11 vs 13). The book made him sound worse than she was and he was the mastermind internally at keeping the staff working and building a culture of misdirection and obedience. He was firing people on an almost daily basis for a while whenever someone questioned their bullshit.

Holmes was the showpiece, who got to play the pretend female Steve Jobs visionary role to the press and investors. And naturally took most of the heat. But the house of cards would probably have fallen apart way sooner if he didn't run the show in the background.

icedchai2• 4 years ago

I read the book and also agree with this. She was the CEO, but he "ran" the company. He also put millions of his own money into it to keep it afloat. He should've been the "adult supervision", so to speak.

g42gregory• 4 years ago

I was thinking the same thing. But then it occurred to me that she was behaving like a version of Steve Jobs. How would then the "adult supervision" of Steve Jobs look like? Fired on the spot? I don't think it's easy or even possible to provide adult supervision in that environment.

mousetree• 4 years ago

Presumably the judge had more evidence to consider than just what was in "the book".

highwaylights5• 4 years ago

I've seen a lot of excuses from CEO's for why they aren't responsible for their actions but "I didn't have adult supervision" takes the cake.

LeroyRaz• 4 years ago

I read the book and I disagree.

Ultimately creating a toxic work environment is not why they are going to jail, but for deceiving the public, and investors. Holmes (the person playing Steve Jobs) lead that.

I have little doubt that if the genders were reversed that Holmes sentence could be easily twice Sunny's.

highwaylights5• 4 years ago

This - I mentioned in another thread when Holmes was sentenced that even if convicted she'll not spend that long in jail (maybe 5 years, most of it on license I would guess?). I suspect Balwani will serve most if not all of the 13 years.

I've no wish to defend either of these people given what they've done, I just think it's worth pointing out that ignoring the disparity doesn't make it go away.

fasthands94• 4 years ago

I disagree. She was the CEO and ultimately had the most control. She also did the most lying to investors.

We don't know what SBF will be charged with yet - but how would we feel if one of the other employees who did more of the actual transfers/faulty accounting got more of a sentence? As long as it clear that the CEO (in this case SBF) knew about the wrongdoing I think it is fair to hold them to the harshest sentence - even if they are not the "mastermind".

It's not like Holmes was a random former actress they found to be a clueless spokesperson. She was a smart person with plenty of resources and education.

dmix9• 4 years ago

but how would we feel if one of the other employees who did more of the actual transfers/faulty accounting got more of a sentence

Sunny wasn't just one of the employees, he was essentially a cofounder and was Elizabeth's closest advisor. The book made it sound like he ran the actual company while she was distracted with the media and having dinners with politicians.

Re: SBF, he owned 90% of Alameda and was responsible for sending them FTX customer funds to cover their loses, so he will always be more guilty than the girl who ran it and likely made the actual loses. These details matter. CEO's have more control formally but who did the dirty work is most important.

alasdair_• 4 years ago

She also did the most lying to investors.

The reason Sunny got a longer sentence is that unlike Holmes, he was convicted of lying to patients, not just investors.

adrr2• 4 years ago

Theranos started in 2003 and had raised $200m+ before sunny joined in 2009. Fraud started before him.

dmix9• 4 years ago

Well, technically early on it was a real business and a genuine attempt to create the blood meter. It was when it became apparent it wasn't going to work but they still maintained that fiction was when it turned into a fraud.

A legitimate startup morphed into a fraud, coincidentally not long after Sunny joined and started secretly dating her.

bitwize• 4 years ago

I think Holmes played a bigger role in the fraud than people give her credit for, whether she "meant to" defraud people or not, I don't think she was like "I'm gonna deceive all these people" but rather "I need to keep the money flowing so that I can develop the technology to make this a reality".

That said, of the two of them, Balwani was the true gangsta. He came in seemingly already knowing how to run a criminal enterprise, and applied those principles to Theranos.

lupire4• 4 years ago

Holmes never and inkling of a plan to make the tech a reality. She was just a figurehead for a scam, the ICO of its day.

ffggvv• 4 years ago

shocked a brown male got a worse sentence than a white female for the same crime

ineedasername2• 4 years ago

They were charged for different crimes and had slightly different roles in perpetuating the fraud within & without the company. Whether or not young white females get more leniency isn’t even quite the issue: That assumes they might get less than deserved. That is a separate questions from whether or not a brown male got more than deserved. The questions may even have some overlap in a Venn diagram but they are not correlated 1:1.

lupire4• 4 years ago

Brown male... with 2 more degrees and decades of experience in business, who did the criminal operations.

nova22033• 4 years ago

HE was convicted on 12 counts. She was convicted on 4 counts.

https://www.npr.org/2022/12/07/1141278121/theranos-sunny-bal...

In July, a jury found Balwani guilty on all 12 felony counts of defrauding Theranos investors and the patients that used the company's unreliable blood tests.

In comparison, Holmes was convicted of four wire-fraud related counts and sentenced to a little over 11 years in prison last month.

dmix9• 4 years ago

What is the sentencing guidelines of wire-fraud vs defrauding investors? I have a feeling that would answer this implied question.

x0x0• 4 years ago

fwiw, @popehat, a criminal defense attorney and former prosecutor, has repeatedly made the point that judges can, and do, take into account counts on which a defendant was not convicted, and sentence them for that conduct.

achow• 4 years ago

Different juries, different outcomes for the same crimes..

Unlike the jury at Holmes’ trial, the jury at Balwani’s trial held him accountable for defrauding patients, not just investors.

jimbob45• 4 years ago

I've been waiting for a Theranos post to dredge something up. On a very early Theranos post in 2013, there was a commenter who identified the company as a scam several years early. Naturally, they received minimal attention. Interestingly, though, it was the only comment they ever made. I've wondered if it was a disgruntled insider wanting the truth to come out.

https://news.ycombinator.com/item?id=6349808

aerovistae• 4 years ago

Oddly that was that account's only comment and they never commented again in the 9 years since.

zacharycohn• 4 years ago

That is how throwaways work..

zozbot2342• 4 years ago

It wasn't just a single commenter. Many people over the years commented here at HN that the Theranos folks were outright delusional and batshit crazy. Unfortunately, the investors and patients who ultimately joined in that collective delusion weren't really aware of HN back in the day.

phendrenad2• 4 years ago

These old comments have been analyzed to death on HN actually.

philip1209• 4 years ago

"It would certainly not be unprecedented if Balwani decides to appeal this ruling."

So, there's precedent for an appeal?

function_seven• 4 years ago

Eh, it's just clumsily worded. Here's my rewrite:

Balwani will likely appeal this ruling. Most defendants do.

sharadov• 4 years ago

well deserved!

transfire2• 4 years ago

I love how I, as a lowly middle-class person, can invest money in a company and if they were pulling the wool over my eyes and I lost my investment, it’s all “oh well, buyer beware”. But let it be some big wigs investing in a disruptive tech (that makes the status quo oh so nervous) then it’s all pitchforks and fire — those devils be damned.

Hence I note the faint stench of Denmark in there somewhere.

DoktorDelta• 4 years ago

It's less "disruptive tech" and more "tech that didn't work and reported incorrect results".

erehweb• 4 years ago

People went to jail for Enron, no? https://en.wikipedia.org/wiki/Trial_of_Kenneth_Lay_and_Jeffr...

zozbot2342• 4 years ago

that makes the status quo oh so nervous

Nervous? The Theranos approach could not possibly work, and serious researchers were well aware of that. There's even a completely hilarious video online where some folks point this out with the most astonishing diplomacy and politeness but nonetheless in the clearest of terms, while Holmes is forced into some sort of clumsy damage control.

transfire2• 4 years ago

Not true at all.

excerionsforte• 4 years ago

"I am responsible for everything at Theranos."

I guess that text really bit him at the jury trial. Held him liable for defrauding both investors and patients unlike the CEO.

dylan604• 4 years ago

If you were someone that was a defendant in a case like this where another case finished before you that ended in prison sentence, the natural assumption would be yours is heading the same way. The psychology of that must be intense. If you're the type that accepted that fate, you can start making proper plans for your incarceration too. But these are people that scammed others, so I would assume not the type to accept that fate. I'm curious how strong the temptation to flee would be?

notch656a6• 4 years ago

Carlos Ghosn agrees with your sentiment.

twelve402• 4 years ago

that guy is on another level : )

splitting his time between Paris and Tokyo and logging roughly 150,000 miles (241 400 km) in airplanes per year

even before his latest adventures, he lived a very, very intense life all over the world, including the Lebanon, which is an adventure on its own. It'd be harder to pull off for an average tech executive.

abudabi123• 4 years ago

There are higher levels to the Jeffrey Epstein and Ghislaine Maxwell's story. Had the media covered the story in the manner of Johnny Depp's trial or the drama comedy roast in, The Wolf of Wall Street, soon enough, we might know Jeffrey Epstein's sentencing length.

killingtime742• 4 years ago

You can also change to pleading guilty at that point. It is very late but still has an impact on sentencing. It may also affect parole decisions.

ubermonkey2• 4 years ago

Both Theranos execs were tried in Federal court. There's no parole in the Federal system.

This is one reason why you see generally longer "sentences" handed down in state courts (where parole is part of the picture) vs. in Federal (where the number is a more accurate representation of how long they'll be in custody).

ubermonkey2• 4 years ago

Both almost certainly surrendered their passports at initial arrest. The time to have fled was before that point.

Alupis5• 4 years ago

I think it would be safe to assume people in this high-flying financial orbit would have access to the sorts of people that could get them out of the country without a passport.

skinnymuch• 4 years ago

How much worse is it to flee now vs before? It’s not clear if Sunny is still 8 figure wealthy or not but it appears he is for now.

selimthegrim4• 4 years ago

Balwani wasn’t going to go back to Pakistan and they wouldn’t have taken him even if he tried.

tinalumfoil• 4 years ago

Mr. Balwani’s former business partner and ex-girlfriend, Theranos founder Elizabeth Holmes, was sentenced last month to 11¼ years for four counts of criminal fraud tied to her now defunct blood-testing startup.
U.S. District Judge Edward Davila, who oversaw both trials, could choose to give Mr. Balwani more time in prison than Ms. Holmes because he was found guilty on additional counts, lawyers said. Judge Davila could find that investors suffered a larger loss due to Mr. Balwani’s fraud, or that Mr. Balwani recklessly put patients at risk of death or serious bodily injury, both of which could add years to his sentence.
“VCs invest in very strange ways,” Judge Davila said.

So do courts apparently.

lizardactivist• 4 years ago

Surprised that he got a longer sentence than Holmes. She really must have made him out like the devil during interrogation and trial. No doubt the nasty old US American racism factored into it, too.

insane_dreamer• 4 years ago

nice to see justice served

__lbracket__• 4 years ago

sympathyFor(pretty white female pregnant with pretty white child) > sympathyFor(stinky brown man)

Given this uncomfortable fact, I'd expected Balwani to get 2-4x more than Holmes. But hope in humanity enhanced upon seeing their almost similar sentences.

givemeethekeys• 4 years ago

If she is out in 2-3 years then your estimate will still be right.

Theranos exec Sunny Balwani sentenced to 13 years in prison

Related Stories