- Throughout the saga of Theranos, the now-shuttered blood testing company that came under fire in 2015 over the accuracy of its blood tests, one of the company’s key executives stayed away from the spotlight.
- Wall Street Journal investigative reporter and author of “Bad Blood” John Carreyrou found that Theranos president Sunny Balwani was in a romantic relationship with Theranos founder and CEO Elizabeth Holmes during the time he was at the company.
- Balwani and Holmes confirmed their relationship in deposition tapes reported by ABC News in January 2019.
- Employees, Carreyrou said, saw Balwani as “the enforcer.”
- Balwani now faces criminal charges of wire fraud as well as civil charges of “massive fraud” by the SEC.
The Department of Justice in June 2018 charged Theranos founder Elizabeth Holmes and former Theranos president Sunny Balwani with nine counts of wire fraud and two counts of conspiracy to commit wire fraud.
Throughout the saga of Theranos, the now-shuttered blood testing company that came under fire in 2015 over the accuracy of its blood tests, Balwani stayed away from the spotlight.
The relationship – which itself stayed out of the headlines throughout the setbacks and scrutiny Theranos faced – was one of the reasons Wall Street Journal investigative reporter John Carreyrou and author of “Bad Blood: Secrets and Lies in a Silicon Valley Startup, knew he had a big story on his hands. In 2015, Carreyrou said he read a New Yorker interview with then-Theranos board member Henry Kissinger. Kissinger said in the interview he tried to set Elizabeth up on dates, not realising that she was in a relationship.
“It instantly became clear to me that she was lying to her board about this romantic relationship that she was having with the number two of the company, who by the way, was also about 20 years older,” Carreyrou told Business Insider.
Balwani and Holmes confirmed their relationship in deposition tapes reported by ABC News in January 2019 on its Nightline program. Holmes said in the tapes that the two were together “for a long period of time.” Both Balwani and Holmes said that they didn’t tell investors about the relationship.
An almost non-existent internet presence
Balwani and Holmes met in Beijing on a trip through Stanford University’s Mandarin program the summer before Holmes went to college. While there, the two struck up a friendship. While it wasn’t clear when Balwani and Holmes became romantically involved, it appears to be around the time she dropped out of Stanford to start Theranos.
Balwani’s background was in technology, after moving to the US in 1986. He had worked as a software engineer at Microsoft and Lotus before joining a startup called CommerceBid.com right before the dot-com bubble and later becoming president and chief technology officer. The company was acquired, and Balwani walked away with $US40 million months before the bubble popped and the company went bankrupt. Balwani owned a Lamborghini Gallardo and a Porsche 911 with vanity licence plates.
But Google the name “Sunny Balwani,” and apart from recent reports about his SEC and DOJ charges related to Theranos, there wasn’t whole lot about the man’s past.
For someone who had been part of the tech industry for so long, Balwani didn’t leave much of a digital footprint. It led sources Carreyrou talked to to suspect that he may have wiped himself from the internet.
“It doesn’t make sense. You would have appeared somewhere, at some time and gotten your photo taken,” Carreyrou said.
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Balwani came into the role of president in 2009. After getting in contact with an insider at the company at the beginning of his reporting, Carreyrou quickly realised Balwani played an important role in the day-to-day life of the company.
“In that first phone call, which was an hour long, [my source] made very clear to me that they were running this thing as a partnership, and that Sunny was kind of the enforcer and Holmes’ older boyfriend,” Carreyrou said. “He painted the portrait of this fraud being run by a couple.”
While Holmes served as the figurehead, Balwani stayed behind the scenes, “terrorizing everyone,” Carreyrou said.
For example, Balwani took it upon himself to keep track of how long employees were working. In one encounter, Balwani brought up security footage that showed a software engineer only working an eight-hour day. He told the employee, “I’m going to fix you.” The engineer promptly resigned and left the building, even as Balwani sent a security officer to try and stop him. Balwani then called the police on the employee.
“A lot of my ex-employee sources, who for the first year was speaking to me on the background, were traumatized by what they experienced at Theranos,” Carreyrou said. “It was like a mind-warping sort of experience.”
In HBO’s “The Inventor: Out for Blood in Silicon Valley,” director Alex Gibney got more than 100 hours of leaked footage from Theranos, which included some of Balwani’s company-wide motivational speeches, company parties, and Holmes and Balwani dancing to “U Can’t Touch This” by MC Hammer.
The footage even captured one of Balwani’s infamous company activities: leading chants of “f— you” to people and companies he perceived as enemies.
Balwani left the company in May 2016 after 7 years at the company. He has been charged with “massive fraud” by the Securities and Exchange Commission. Balwani was included in charges of wire fraud by the DOJ, stemming from allegations that the two engaged in a scheme to defraud investors and a separate scheme to defraud doctors and patients.
Balwani’s lawyer, Jeffrey Coopersmith, said in a June statement that Balwani had committed no crimes. “Mr. Balwani looks forward to trial because he did not defraud anyone, and it will be an honour to defend him vigorously,” Coopersmith said. Balwani and Holmes are slated to appear in court next on April 22.
Coopersmith told Business Insider at the time that the case brought by the Department of Justice is an “odd case,” given that Balwani hadn’t made money out of the venture.
“I don’t have any recollection where a government charged someone where that person didn’t get any financial benefit,” Coopersmith told Business Insider.
This article was initially published in May 2018 and has been updated.
- Read more:
- The reporter who broke the Theranos saga wide open pinpoints the moment he knew he had a big story on his hands
- The rise and fall of Theranos, the blood-testing startup that went from Silicon Valley darling to facing fraud charges
- The mysterious story of former Theranos President Sunny Balwani, who former employees saw as an ‘enforcer’ and now faces criminal charges of wire fraud
- From Betsy DeVos to Rupert Murdoch to the Walton family, here are the investors who lost hundreds of millions investing in Theranos