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Jury finds Theranos executive Sunny Balwani guilty in fraud case

His former business and romantic partner Elizabeth Holmes was convicted on four counts of fraud in a separate trial.

SAN JOSE, Calif. (CN) — A Silicon Valley jury has found former Theranos executive Ramesh "Sunny" Balwani guilty of all 12 counts of fraud, amid the collapse of the $9 billion blood testing company. 

The jury deliberated at Robert F. Peckham U.S. Courthouse in San Jose for nearly a week after hearing closing arguments from both sides in Balwani’s case, about six months after Theranos founder and CEO Elizabeth Holmes was found guilty on four counts of fraud. Their decision was unanimous.

Balwani was accused of working with Holmes, his friend and then-romantic partner, to defraud investors by claiming their technology would revolutionize the health care industry with blood tests using only one drop of blood. A judge severed their criminal cases after Holmes' legal team she would make accusations about their relationship since 2002 as part of her defense. 

The jury in Balwani’s case was asked to decide if he helped oversell the Theranos' device’s capabilities and reliability, and heard text and email evidence used in Holmes’ trial connecting the two romantically. He faces up to 20 years in prison as well as a fine of $250,000 plus restitution for each count of wire fraud and conspiracy.

Balwani’s lawyers depicted him as a loyal executive who tried to save the blood-testing company. Attorney Jeffrey Coopersmith painted Balwani as a tireless executive who “put his money where his mouth is” by investing about $15 million of his fortune into Theranos between 2009 and 2011 because he believed in Holmes’ vision. He began living with Holmes in 2005.

But prosecutor Jeffrey Schenk said in closing arguments lasting more than three hours that “Mr. Balwani is not a victim, he is the perpetrator of the fraud." Many former Theranos employees testified in Holmes' trial that they had more interactions with Balwani and found him to be domineering. Federal prosecutors called two dozen witnesses to convince jurors Balwani deceived investors and patients.

Holmes founded Theranos at 19, saying she aspired to make blood testing cheaper and more efficient. She claimed her startup, which raised $945 million from investors like Rubert Murdoch, had developed technology capable of testing for conditions including cancer and diabetes using only a few drops of blood. Her company began to fall after a 2015 Wall Street Journal investigation revealed holes in its testing methods and technological capabilities.

In her defense, Holmes did not blame Balwani for the company’s problems. But in a surprise testimony, she accused him of sexual abuse. Prosecutors argued Holmes was running out of money in 2010 and to save her company she began misleading investors and journalists about the efficacy of her portable testing devices, and that Balwani did the same over the ensuing years.

Holmes will be sentenced in September, but she has asked the judge to overturn the verdict and acquit her.

Balwani's sentencing hearing is set for Nov. 15.

Government attorneys and Balwani's legal team did not respond to requests for comment by press time.

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