Holmes and Balwani’s appeal falls flat as court upholds fraud convictions | TechCrunch

Elizabeth Holmes and Ramesh “Sunny” Balwani’s appeals to overturn their fraud convictions and reduce their prison sentences were denied Monday by the Northern District Court of California, which also refused to soften their $452 million joint restitution order.

Holmes, the founder of Theranos, and Balwani, its former COO, were convicted in separate trials in 2022 for defrauding investors about the capabilities of Theranos’s blood-testing technology. Holmes was sentenced to more than 11 years in prison, and Balwani received nearly 13 years. Both began serving their sentences in 2023.

In their appeal, the two argued that the district court allowed improper testimony from former Theranos employees who served as lay witnesses but wound up offering improper expert testimony without the necessary legal designation. The appeals panel agreed that some testimony crossed into expert territory but concluded the errors were harmless.

Holmes also contested the inclusion of a damning government report that highlighted failures in Theranos’s lab, arguing it unfairly influenced the jury. But the court found the report relevant in establishing her knowledge and intent. Holmes argued that her rights were violated when she was prohibited from cross-examining a former Theranos laboratory director regarding aspects of his post-Theranos employment. Again, the appellate panel disagreed, saying the court didn’t “abuse its discretion in limiting the scope of the cross-examination.”

Meanwhile, Balwani claimed his charges were improperly expanded during the trial (the panel dismissed this argument pretty forcefully). He also argued that his right to a fair trial was violated because the government didn’t correct what he said was false testimony from two investors. The court rejected that argument, too, saying even if there were issues, they wouldn’t have affected the outcome of the case.

Balwani is serving out his sentence at the grimly named Terminal Island, a minimum-security federal facility just outside of Los Angeles; Holmes is serving hers at Camp Bryan, a minimum security federal prison camp that’s approximately 100 miles from Houston.