From Davis Wright Tremaine: Attorney for Ramesh Sunny Balwani Issues Statement Regarding Department of Justice Charges

The following statement is attributed to Sunny Balwani’s attorney,
Jeffrey B. Coopersmith, partner at Davis Wright Tremaine/Seattle and Los
Angeles. This statement was issued following the announcement by the
Department of Justice that it has charged Balwani with fraud.

“In over 28 years of practicing law, as both a federal prosecutor and a
defense attorney, I have never seen a case like this one, where the
government brings a criminal prosecution against a defendant who
obtained no financial benefit and lost millions of dollars of his own
money. Mr. Balwani committed no crimes. He did not defraud Theranos
investors, who were among the most sophisticated in the world. He did
not defraud consumers, but instead worked tirelessly to empower them
with access to their own health information. Mr. Balwani is innocent,
and looks forward to clearing his name at trial.

“The government has been under intense criticism for failing to
prosecute cases arising from the worst financial crisis since the Great
Depression, and it may have charged this case in response to that
criticism. Ironically, right before Mr. Balwani joined Theranos in 2009,
in the depths of that financial crisis, he guaranteed an unsecured, $12
million loan, saving scores of U.S.-based technology and manufacturing
jobs without demanding common benefits typically provided by companies
in these circumstances, such as significant financial concessions or
greater control over the company. Mr. Balwani also did not demand a
round of employee layoffs to reduce the risk of default by the company.
When he joined Theranos shortly after that, Mr. Balwani asked for only
$1 of annual compensation, and later purchased stock from Theranos with
approximately $4.5 million of his own money so that the company could
use the funds to build the business. Mr. Balwani had opportunities to
sell his stock at a substantial profit but never sold even one share.

“Mr. Balwani was also instrumental in assembling a team at Theranos of
over 100 scientists with Ph.D and M.D. degrees. These employees, along
with hundreds of others, worked extremely hard along with Mr. Balwani
and Ms. Holmes to try to make Theranos a success. Unfortunately, in the
end, Theranos was unable to execute on its business plan — although it
still created tremendous value. The value of Theranos’ intellectual
property is such that a lender used it to secure a $100 million loan to
the company in late 2017. Mr. Balwani is a named inventor on many of the
company’s patents. If the federal government is going to start treating
business failures as fraud cases, it will stifle the innovation that is
the lifeblood the U.S. needs to stay globally competitive.

“All Mr. Balwani did was put his heart and soul, and millions of dollars
of his money, toward changing the face of healthcare by giving people
access to cost-effective blood tests so they could take charge of their
own health and monitor changes for signs of disease. Mr. Balwani
believed so much in Theranos that over the years his own mother and
other family members used the company’s lab to enable them to make
informed decisions about important health care matters.

“Mr. Balwani looks forward to trial because he did not defraud anyone,
and it will be an honor to defend him vigorously.”

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