Balwani charges

Former Theranos COO Ramesh Balwani appears in federal court for a status hearing July 17, 2019 in San Jose, Calif. Former founder of Theranos Elizabeth Holmes and Balwani are facing charges of conspiracy and wire fraud for allegedly engaging in a multimillion-dollar scheme to defraud investors with the Theranos blood testing lab services. (Kimberly White/Getty Images)

On Feb. 12, former Theranos founder and CEO Elizabeth Holmes and former Indian American COO of the infamous blood testing firm, Ramesh ‘Sunny’ Balwani, received some regal respite as a federal judge in California dropped some of the charges levelled against the duo.

ABC News reports that the federal judge overseeing the criminal case against the two partially dismissed four charges, narrowing the case brought by the Department of Justice.

Holmes is accused of claiming that her firm could conduct comprehensive blood test with a single drop of blood, revolutionizing the blood testing industry.

The blood testing firm was first exposed in a Wall Street Journal report of misleading claims about the efficiency of its tests following which Theranos begin to disintegrate.

Holmes and Balwani were charged with “massive fraud” by the U.S. Securities and Exchange Commission in 2018. Balwani, who quit Palo Alto, Calif.-based Theranos in 2016, served as the company’s president and chief operating officer. Theranos has subsequently settled with the SEC, but Balwani still faces the SEC lawsuit, which seeks an order requiring him to pay an unspecified monetary penalty, and to prohibit him from acting as an officer or director of any publicly-listed company, among other factors.

Balwani was also dating Holmes, who is 30 years his junior.

The U.S. Department of Justice alleged they perpetrated multimillion-dollar schemes to defraud investors, doctors and patients; they have both pleaded not guilty but face up to 20 years in prison if convicted. (Read earlier India-West story here: https://bit.ly/2oPhgLq)

In his order Feb. 12, United States District Judge Edward Davila, according to the ABC report, partially dismissed one count of conspiracy to commit wire fraud and three counts of wire fraud, on the basis that the government failed to allege that Holmes and Balwani had a specific intent to defraud doctors and “non-paying patients,” those fully covered by insurance.

The judge, reports ABC, stated in the order that the government “fails to allege that the defendants intended to deprive doctors of their money or property” and that insured patients “would have paid their premiums regardless of Theranos’ blood tests.”

Holmes and Balwani, as per ABC, were each charged with two counts of conspiracy to commit wire fraud and nine counts of wire fraud. If convicted, Holmes and Balwani could face not only prison time but a fine of $250,000 for each count of wire fraud and for each conspiracy count.

Holmes’ attorneys had sought to get the entire case dismissed but now the trial is scheduled for August.

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