SAN FRANCISCO--(BUSINESS WIRE)--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.”