Early life, education, and pre-Theranos career
Ramesh Balwani was born in Pakistan to a Hindu family.Because of the difficulties of being a Hindu in Pakistan, the family later moved to India. The family then immigrated to the United States, and in 1986 Balwani began undergraduate studies at the University of Texas at Austin where he was a member of the Pakistani Students Association.He received an undergraduate degree in information systems.Balwani worked for Lotus Software and Microsoft before 1998, when he helped to create of CommerceBid,a software development company that helped businesses buy and sell items over the burgeoning Internet.In 1999, the company was purchased by Commerce One, another business development software company with a high valuation stock. The buyout was done entirely with stock andBalwani joined the board of the new company. In July 2000, Balwani cashed out his shares in Commerce One, pocketing nearly $40 million shortly before the company went out of business, just before the dot com bubble burst. He later went back to school and received a Master of Business Administration from the University of California, Berkeley in 2003. He spent another four years in a computer science graduate program at Stanford University, but dropped out in 2008.
While enrolled at Berkeley, Balwani met Elizabeth Holmes, who was in her senior year of high school.Holmes then went on to Stanford University to pursue an undergraduate degree in chemical engineering,but later dropped out to focus full-time on Theranos.
Balwani joined Theranos in 2009, a few years after Holmes founded it. He ran the company’s day-to-day operations as its president. He had no training in biological sciences or medical devices,which became an issue due to the absence of medical experts on the company’s board of directors and Balwani’s behavior. He was described by former Theranos employees as overbearing, uncompromising and so concerned about industrial espionage that he verged on paranoia.
Balwani publicly equated the Edison, Theranos’ blood testing device, with the discovery of antibiotics. Within Theranos, Balwani was known for using technical terms he seemingly did not understand in what others believed were attempts to appear more knowledgeable.
The Wall Street Journal reported in October 2015 that the Edison blood testing device by Theranos produces inaccurate medical diagnoses and results. Edison machines frequently failed quality-control checks and produced widely varying results, results that were corroborated in a report released in March 2016 by the federal Centers for Medicare and Medicaid Services (CMS).In April 2016, Theranos told regulators it had voided all test results from Edison machines for 2014 and 2015, as well as some other tests it ran on conventional machines.
In January 2016, the CMS sent a warning letter to Theranos after inspecting its Newark, California, laboratory.CMS regulators proposed a two-year ban on Balwani from owning or operating a blood lab after the company had not fixed problems within its California lab in March 2016.
The other charges of fraud against Theranos include claiming the company’s technology was being used by the U.S. Department of Defense in combat situations despite never having been used.
Another false claim included claiming a $100 million revenue stream in 2014 that was actually $100,000.
SEC fraud charges
In March 2018, the SEC brought securities fraud charges against Balwani and Holmes for engaging in an “elaborate, years-long fraud”.They were charged 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,” said the SEC.Holmes settled the case out of court without admitting or denying wrongdoing, but Balwani is still in litigation as of 2019.He says he is innocent of the charges.
On June 15, 2018, following an investigation by the U.S. Attorney’s Office in San Francisco that lasted more than two years, a federal grand jury indicted president Ramesh “Sunny” Balwani and Elizabeth Holmes on nine counts of wire fraud and two counts of conspiracy to commit wire fraud. Prosecutors allege that Holmes and Balwani engaged in two criminal schemes, one to defraud investors, the other to defraud doctors and patients.The case is proceeding in the U.S. District Court in San Jose. Balwani and Holmes pleaded not guilty.Balwani’s defense is that he never made any money while at Theranos.
Balwani was in a romantic relationship with Elizabeth Holmes during his tenure at Theranos.Holmes met him in 2002 at age 18, while still in school. He was 19 years older than Holmes and married at the time. Their relationship was not disclosed to their Theranos investors.
He was previously married to a Japanese artist named Keiko Fujimoto.Fujimoto and Balwani lived in San Francisco, before they divorced in December 2002.