Holmes, Balwani Get Lengthy Prison Terms for Theranos Fraud

SENTENCING OF ELIZABETH HOLMES AND RAMESH “SUNNY” BALWANI in federal court caps the strange, yet captivating, saga of Theranos and its flawed blood testing technology.

For laboratory professionals, the four years of legal wranglings that surrounded the Theranos fraud case may be remembered for shining a spotlight on the responsibilities of laboratory directors under the Clinical Laboratory Improvement Amendments of 1988. (See TDR, “CLIA Lab Director Testimony Shows Risks to Pathologists,” Nov. 8, 2021.)

Court gavelHolmes—the founder and former CEO at Theranos—was sentenced on Nov. 18 in federal court in San Jose, Calif. Judge Edward Davila gave her 11 years, three months in prison. Holmes will report to authorities on April 27 to begin her sentence. A jury convicted Holmes in January 2022 on three counts of wire fraud and one count of conspiracy related to defrauding Theranos investors of millions of dollars.

“I am devastated by my failings,” Holmes told the judge, according to NBC Bay Area reporter Scott Budman, who was in the courtroom. “I have felt deep pain for what people went through because I have failed them … To investors, patients, I am sorry.”

Balwani Gets Nearly 13 Years

Less than three weeks later, on Dec. 7, Davila sentenced Balwani—the former Chief Operating Officer and President at Theranos—to 12 years, 11 months behind bars. 

In July, a jury found him guilty of 10 counts of wire fraud and two counts of conspiracy. Balwani must report to prison on March 15. 

Budman noted that Balwani did not address the judge at all during sentencing.

Holmes and Balwani were unsuccessful in seeking new trials in October based on an odd conversation between Holmes’ partner, William Evans, and government star witness and pathologist Adam Rosendorff, MD. 

Rosendorff, a former lab director at Theranos, showed up at Evans’ and Holmes’ residence in August and allegedly said the trial results were weighing on him, according to court filings by Holmes’ lawyers. (See TDR, “Ex-Theranos CEO Elizabeth Holmes Awaits Ruling on New Trial Request,” Oct. 31, 2022.)

Legal Chain Reaction

That set off a legal chain reaction as Holmes and Balwani sought new trials based on the belief that Rosendorff’s testimony was tainted. However, in a later affidavit filed with the court, Rosendorff maintained his testimony was accurate, but that he felt bad about the trial’s effects on the families of the defendants.

Holmes and Evans have a one-year-old child, and she is currently pregnant with another child. 

From the start, Theranos left a bad taste in the mouths of many clinical laboratory managers and pathologists.

During the peak period of news coverage about Holmes’ plans to disrupt the clinical lab industry, hospital and health system CEOs believed they would be able to downsize their in-house medical laboratories and obtain lab tests from Theranos at savings of 50% or more. Consequently, from 2013 through 2015, numerous hospital lab leaders saw administrators deny or delay requests for capital investment in their labs.

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