Who is Sunny Balwani, the Indian-origin executive charged in the Theranos fraud in the US?

Its founder and CEO Elizabeth Holmes was at one point billed as the “female Steve Jobs”, but over time her story ended up becoming a cautionary tale in Silicon Valley. Balwani was her boyfriend for a number of years and was deeply involved in the company as well.

Prosecutors said he contributed to risking patient health and defrauded the company’s investors.

Who is Sunny Balwani?

Balwani’s family belonged to Sindh in Pakistan and went on to live in India. He moved to the US from India during the 1980s and studied at the University of Texas.

In court documents, Balwani’s lawyers painted him as a hardworking immigrant who moved from India to the US and became the first member of his family to attend college. He graduated in 1990 with a degree in information systems and then moved to Silicon Valley, the hub of many high-value tech startups, including Amazon, Google, and Facebook.

He worked as a computer programmer for Microsoft before founding an online startup that he sold for millions of dollars in the 1990s.

Relationship with Elizabeth Holmes and joining Theranos

Balwani met Holmes around this time, when he was aged 37 and Holmes was 18. Elizabeth Holmes was raised in Washington DC and California in a wealthy family with a medical and entrepreneurial background. She began studying chemical engineering at the prestigious Stanford University in 2002 and started Theranos the following year. In March 2004, she dropped out of university, and Theranos was incorporated soon after. Holmes was just 19 years old at the time.

The two soon formed a personal relationship and Balwani became interested in Holmes’ business ideas as well. His lawyers said he eventually invested about $5 million in a stake in Theranos that eventually became worth about $500 million on paper.

The controversies around Theranos

Theranos was marketed by its founder as a gamechanger. Theranos claimed that while ordinary blood tests for scanning health problems relied on drawing a significant amount of blood from a patient, the Theranos machine would only draw a small amount and conduct multiple tests on it – ranging from high cholesterol and high blood sugar to liver dysfunction and cancer – at a very low price.

This claim was boosted with the help of some important endorsements and funding from well-known personalities in the US, such as media mogul Rupert Murdoch, Donald Trump’s Secretary of Education Betsy DeVos, Walmart heiress Alice Walton and several senior US military officials.

For a while, it seemed all was going well. Holmes began to be honoured as a young woman innovator by the likes of Time Magazine (on whose annual list of 100 Most Influential People in the world she was once featured) and others in the media, and Theranos’s credibility grew.

But an expose in The Wall Street Journal in 2015 by journalist John Carreyrou led to severe doubts being cast on the company, and whether some of the marketing was simply lying.

After his report in the WSJ alleged that the company was diluting blood samples and subjecting them to traditional tests instead of using the promised Theranos machines, many stories emerged of the company defrauding customers, of the machine producing incorrect results, and of issues with the US Food and Drug Administration, which had never entirely approved the tests.

The fall of Theranos and allegations against Balwani

Eventually, public opinion and the market began to turn against Theranos and its star, Holmes. American authorities began questioning those involved with the company.

On March 14, 2018, the US markets watchdog, the Securities and Exchange Commission, charged Theranos, Holmes, and the company’s former president Balwani with “raising more than $700 million from investors through an elaborate, years-long fraud in which they exaggerated or made false statements about the company’s technology, business, and financial performance”.

The case against Theranos went to trial, and in July this year, a jury found Balwani guilty of all 12 felony counts of defrauding Theranos investors and the patients that used the company’s blood tests. During the hearings, Holmes claimed she was innocent and admitted mistakes were made in the company’s operations.

Crucially, she claimed Balwani emotionally abused her in their relationship and at times dictated how she should act and present herself in order to guarantee success for Theranos – allegations that were denied by Balwani.

District Judge Edward Davila sentenced Holmes to 11 years and 3 months in federal prison and ordered her to surrender to begin serving her sentence on April 27, 2023.

In addition to the 155 months prison term, Judge Davila sentenced Balwani to three years of supervision following release from prison. A hearing to determine the amount of restitution to be paid by Balwani is to be scheduled in the future.