The scandal revolved around false claims by the company to have developed a device that could detect hundreds of diseases and other potential problems with just a few drops of blood drawn from a finger prick.
After years of promoting the technology, Holmes and Balwani were warned that blood tests were not accurate, but they continued to raise money from investors, including billionaires like software mogul Larry Ellison and media mogul Rupert Murdoch, and implemented the technology in some Walgreens. stories.
U.S. District Judge Edward Dávila said the financial statements produced by Balwani “were not just projections, they were lies” and “a true flight from honest business practices.”
The case shed a bright light on the dark side of Silicon Valley, exposing how its culture of unlimited hype and ambition could turn to lies.
Both Holmes, 38, and Balwani, 57, could have received up to 20 years in prison. Balwani spent six years as Theranos’ chief operating officer while she was romantically involved with Holmes until an acrimonious split in 2016.
“Mr. Balwani is not the same as Elizabeth Holmes,” his lawyers wrote in a memo to the judge. “In fact, he invested millions of dollars of his own money; he never sought fame or recognition; and he has a long history of giving silence the less fortunate.” Balwani’s lawyers also claimed that Holmes “was dramatically more culpable” for the Theranos fraud.
But federal prosecutors portrayed Balwani as a ruthless and power-hungry accomplice in crimes that defrauded investors and endangered people with flawed results. The blood tests were to be made available in a partnership with Walgreen’s that Balwani helped design.
“Balwani presented a false story about Theranos technology and financial stability day after day in meeting after meeting,” prosecutors wrote in their memo to the judge. “Balwani kept up this facade of achievement, after making the calculated decision that honesty would destroy Theranos.”