Theranos Trial: Pakistan-born Indian-American Tech Exec Convicted of Fraud

In yet another blow to Silicon Valley's "fake it till you make it" mantra, a federal jury has convicted former Theranos executive Ramesh "Sunny" Balwani on all 12 counts of fraud. Balwani was born in 1965 in Pakistan to a Sindhi Hindu family.  He attended Aitchison College, an elite prep school in Lahore that is also the alma mater of former Prime Minister Imran Khan of Pakistan. His family emigrated to India in 1984 and then to the United States in 1987. He studied at the University of Texas at Austin and University of California at Berkeley. His one-time girlfriend and partner Elizabeth Holmes, the founder of Theranos, was convicted on similar charges earlier this year. Both face up to 20 years in prison. 

Elizabeth Holmes (L) and Sunny Balwani of Theranos

"Fake it till you make it" is a well-known phrase in Silicon Valley. It means to consciously cultivate an attitude, feeling, or perception of competence that you don't currently have by pretending you do until it becomes true.  Holmes and Balwani claimed to have developed a proprietary blood-testing technology to produce results with just a few drops of blood from a finger prick, eliminating the need for large needles and vials of blood. They used this false claim to defraud unsuspecting investors, including VCs, of more than a billion US dollars. 

Balwani, 57, ran the company’s lab, where the blood testing occurred, and was quick to rebuff and sometimes fire employees who raised concerns about the performance of Theranos technology, prosecutors and witnesses said. He was responsible for the financial models given to investors that greatly exaggerated revenue, prosecutors said, and he managed the company’s partnership with Walgreens Boots Alliance Inc., in which the startup would offer its finger-prick tests inside the drugstore chain, according to the Wall Street Journal. 

Balwani is a technology industry veteran. He has worked in the software industry, including at Lotus Software and Microsoft Corp., but much of his wealth is derived from CommerceBid.com, an e-commerce startup that was acquired by CommerceOne, led by Pakistani-American entrepreneur Asim Abdullah, for $228 million. Karachi-born Asim Abdullah now owns the fashion house of Emmanuel Ungaro. 

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Has Intel's Indian-American Techie Risked America's Global Technology Leadership?

Intel has recently fired its Indian-American chief engineer Venkata Murthy Renduchintala, who also served as Group President of the Technology, Systems Architecture and Client Group (TSCG), for failure to deliver 7 nanometer semiconductor technology on schedule, according to Reuters.  The news has knocked the market value of Intel by tens of billions dollars. The American company, the biggest global chip manufacturer with in-house fabrication plants, has also decided to outsource manufacturing. This could deal a serious blow to America's global leadership in chip manufacturing which is fundamental to all other computer and communications related technologies.

Intel's Global Leadership:

Intel Corp. (INTC), founded in 1968 in Silicon Valley, is the world's largest and the most advanced semiconductor company, larger than the second-ranked Samsung Semiconductors, and more than triple the size of the next-largest domestic producer, Qualcomm Inc. (QCOM).

What distinguishes Intel from most other semiconductor companies is that it manufactures its products in-house. The bulk of semiconductor “manufacturers” outsource the actual work of building their products out to foundries in China and Taiwan.

Last week, the company revealed that its smaller, faster 7-nanometer chipmaking technology was at least six months behind schedule and it would have to outsource manufacturing to keep its products competitive.

Taiwan Semiconductor Manufacturing Company (TSMC):

Taiwan-based TSMC has 6 nanometer technology in production already. There is widespread speculation that Intel will turn to it to manufacture its most advanced microprocessors.

TSMC manufactures chips for the vast majority of the leading fabless semiconductor companies including Advanced Micro Devices (AMD), Apple Inc., Broadcom Inc., Marvell, Nvidia, and Qualcomm.

US Technology Leadership Under Threat:

Semiconductor manufacturing technology is fundamental to all other computer and communications technologies. While the U.S. still has most of the leading chip design companies, there are very few leading semiconductor manufacturing facilities in the country. In fact, the US, which invented the chip technology,  has slipped from being first in semiconductor manufacturing at the dawn of the industry to fifth in the world.

Recognizing the issue of foreign sourcing of critical technologies, the US has forced TSMC to start a fab in Arizona.  But TSMC’s proposed fab in Arizona will have relatively small capacity, sufficient to meet only a fraction of the manufacturing demand of top companies like Apple, AMD, Marvell, Nvidia, etc.  The US Congress is in the process of legislation that will provide greater incentives to companies to manufacture chips in the United States.

US-China Tech War:

TSMC is caught in the cross-fire of US-China technology war.  Almost all major semiconductor manufacturers, including TSMC, rely on equipment made by US companies. The US government is attempting to leverage the dominance of US chipmaking equipment industry to shut out the Chinese technology companies.

US Commerce Department has recently announced that henceforth, any semiconductor chips made with equipment built by American companies cannot be sold to Huawei without prior approval and license from the DOC.

Summary:

Silicon Valley tech giant has revealed that its smaller, faster 7-nanometer chipmaking technology is at least six months behind schedule and it would have to outsource manufacturing to keep its products competitive. The company has blamed the failure on its Indian-American chief engineer who has since been fired. What is at stake here is the US technology leadership because semiconductors are fundamental to all computers and communications products. Taiwan-based TSMC appears to be the biggest beneficiary of Intel's failure.

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Caste Discrimination Rampant Among Silicon Valley Indian-Americans

Over two-thirds of low caste Indian-Americans are discriminated against by upper caste Indian-Americans in Silicon Valley, according to a report by Equality Labs, an organization of Dalits in America. Dalits also report hearing derogatory comments about Muslim job applicants at tech companies. These revelations have recently surfaced in a California state lawsuit against Silicon Valley tech giant Cisco Systems.


Religious Discrimination:

Both caste and religious discrimination are rampant among Indian-Americans in Silicon Valley. Back in 2009,  there was a religious discrimination lawsuit filed  against Vigai, a South Indian restaurant in Silicon Valley. In the lawsuit filed in Santa Clara County Superior Court, Abdul Rahuman, 44, and Nowsath Malik Shaw, 39, both of San Jose, alleged they were harassed for being Muslim by Vaigai's two owners, a manager and a top chef — a violation of the Fair Employment and Housing Act, according to a report in the San Jose Mercury News.

According to the complaint, restaurant personnel regularly used ethnic slurs such as "Thulakkan," a pejorative term for Muslims in Sri Lankan Tamil dialect, to harass the two Muslim cooks. Also according to the complaint, restaurant staff were encouraged to call the plaintiffs by names such as "Rajan" or "Nagraj" under the pretext of not wanting to upset customers who might stop patronizing the restaurant if they heard the men referred to by their Muslim names.

Modi in Silicon Valley

The complaint also stated that the plaintiffs were forced to participate in a religious ceremony despite telling the owners it was against their Islamic beliefs. The complaint alleged that the restaurant owners insisted on their participation and proceeded to smear a powder on their foreheads, making the religious marking known as a "tilak."

Upper Caste Silicon Valley

"Dominant castes who pride themselves as being only of merit have just converted their caste capital into positions of power throughout the Silicon Valley," says Thenmozhi Soundarajan of Equality Labs. Vast majority of Indian-Americans in Silicon Valley support India's Islamophobic Prime MInister Narendra Modi. Modi held a huge rally at a large venue in Silicon Valley where he received a rousing welcome in 2015.

Caste vs Race in America:

Contrary to The International Convention on the Elimination of All Forms of Racial Discrimination (ICERD) that includes discrimination based on caste, most Indian-Americans argue that race is not caste . Dating back to 1969, the ICERD convention has been ratified by 173 countries, including India. California’s lawsuit reinforces that caste is race. It will now make it harder for companies to ignore caste discrimination. While the US has no specific law against the Indian caste system, the California Department of Fair Employment and Housing has filed the lawsuit against Cisco using a section of America’s historic Civil Rights Act which bars race-based discrimination. Here is an excerpt of an article published in TheWire.in on the lawsuit recently:

"In October 2016, two colleagues informed John Doe, a principal engineer at Cisco, that his supervisor, Sundar Iyer, had told them that he (Doe) was from the “Scheduled Castes” and had made it to the Indian Institute of Technology via affirmative action. “Iyer was aware of Doe’s caste because they attended IIT at the same time,” said the case. The suit says that, when confronted by Doe, Iyer denied having disclosed his caste. In November 2016, Doe contacted Cisco’s HR over the matter. Within a week of doing so, Iyer reportedly informed Doe he was taking away Doe’s role as lead on two technologies. Iyer also removed team members from a third technology that Doe was working on and reduced his role to that of an independent contributor and he was isolated from his colleagues, the lawsuit says. In December 2016, Doe filed a written complaint with HR on the matter."

Summary:

Caste discrimination is rampant among Indian-Americans and NRIs (Non-resident Indians) in Silicon Valley with 67% of low caste Indians reporting being victims of such discrimination in workplace. Muslims also face employment discrimination in some of the workplaces dominated by Indian managers. California state has filed a lawsuit against Silicon Valley tech giant Cisco Systems alleging caste discrimination.

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Opioid Crisis: Indian-American Pharma CEO Jailed

Dr. John Nath Kapoor, Indian-American CEO of Insys Therapeutics, has been found guilty of conspiring to recklessly and illegally boost profits from the opioid painkiller Subsys, a fentanyl spray designed to be absorbed under the tongue, according to multiple media reports.

Dr. John Nath Kapoor

In 2018, data showed that opioid overdoses killed an average of 128 Americans everyday.  Last year, nearly 70,000 Americans died of opioid overdoses.  Opioid abuse has become a public health crisis with devastating social, economic and health consequences in vast swathes of America.  In spite of knowing the dangers opioids posed, drug companies like Kapoor's Insys heavily promoted such drugs by paying physicians to overprescribe, resulting in enormous company profits.

Kapoor has received five and a half years jail sentence.  CBS has reported that others working for him have been sentenced to serve from 12 to 33 months, in part because of the testimony of the government's star witness: Alec Burlakoff, the senior vice president of sales at Insys, who had pled guilty and cooperated with prosecutors.

Kapoor, billionaire entrepreneur and former CEO of Insys Therapeutics, was born in Amritsar, India. He studied pharmacy at Institute of Chemical Technology in Mumbai, India. He received a doctorate in medicinal chemistry from University of Buffalo, New York, in 1972. He became a major American success story until he was arrested and charged in 2017 under RICO (Racketeer Influenced and Corrupt Organizations) laws.

Earlier in June, 2020, three Indian-American physicians were found to have faked results of a hydroxychloroquine (HCQ) study they published in New England Journal of Medicine and The Lancet. Both journals were forced to retract it.

Last year, an Indian-American operator and several Indian-American and other doctors participating in a home health care business in Silicon Valley were charged by US federal prosecutors with fraud.

India and Pakistan are among the top three sources of foreign medical professionals in the United States.

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