For months, Ramesh Balwani’s attorneys have tried to tell apart him from Elizabeth Holmes, his former girlfriend and enterprise companion on the failed blood-testing firm Theranos.
Ms. Holmes was discovered responsible of defrauding the start-up’s traders in January. Mr. Balwani is looking for a unique final result in his personal fraud trial.
However on Tuesday, in closing statements for Mr. Balwani’s trial, prosecutors tied him on to Ms. Holmes and the yearslong fraud at Theranos. Jeffrey Schenk, an assistant U.S. legal professional and a lead prosecutor on the case, displayed a textual content message that Mr. Balwani despatched Ms. Holmes in 2015 that was used as proof within the trial.
“I’m accountable for the whole lot at Theranos,” Mr. Balwani wrote. “All have been my choices too.”
The textual content message was an act of contrition, Mr. Schenk stated, including, “He’s acknowledging his position within the fraud.”
The presentation capped greater than three months of testimony in Mr. Balwani’s trial, which largely mirrored that of Ms. Holmes’s final fall. Ms. Holmes and Mr. Balwani, 57, had been charged in 2018 for exaggerating the capabilities of Theranos’s blood-testing machines and enterprise efficiency when, in actual fact, the merchandise didn’t work and its enterprise was struggling. The duo pleaded not responsible. Ms. Holmes was convicted on 4 of 11 fees.
The trial for Mr. Balwani, who is named Sunny, lacked the fanfare of Ms. Holmes’s high-profile case. It nonetheless serves as a coda to a waning period of start-up progress that always relied on hype and hyperbole. Ms. Holmes and Mr. Balwani are among the many only a few tech executives who’ve ever been prosecuted for fraud.
Simply as Ms. Holmes tried blaming others for the deceptions at Theranos, Mr. Balwani has pointed the finger again at her. All through the trial, his attorneys argued that a lot of Theranos’s blood exams had labored. They usually stated that Ms. Holmes managed Theranos, not Mr. Balwani. They had been set to start their closing argument afterward Tuesday.
Ms. Holmes, now 38, met Mr. Balwani when she was 18. They started relationship years later, after Ms. Holmes had based Theranos. In 2009, Mr. Balwani invested in Theranos and have become its chief working officer, finally taking cost of its lab. The pair saved their relationship a secret and lived collectively in a sprawling residence they co-owned in Atherton, Calif.
In 2016, after Theranos got here underneath hearth for mendacity about its blood testing capabilities, Mr. Balwani left the corporate and break up with Ms. Holmes. The pair had been charged with fraud collectively, however Ms. Holmes argued in filings to sever the instances and accused Mr. Balwani of emotional and sexual abuse. Her trial included dramatic testimony recounting the accusations. That topic was excluded from Mr. Balwani’s trial.
To convict Mr. Balwani, prosecutors should persuade jurors that he deliberately lied to traders and sufferers about Theranos’s blood exams and enterprise dealings.
Prosecutors tried blaming Mr. Balwani for monetary projections that Theranos confirmed to traders and the situation of its labs. New witnesses included traders and executives who dealt instantly with Mr. Balwani, somewhat than Ms. Holmes.
One projection, introduced to traders in October 2014, confirmed Theranos would usher in $140 million that yr. In actuality, income was restricted. The subsequent yr, Mr. Balwani projected practically $1 billion in income in pitches to traders. Theranos’s inside projections had been a lot decrease, proof confirmed, and the truth was nearer to zero.
A brand new witness, Patrick Mendenhall, who dealt instantly with Mr. Balwani whereas investing in Theranos, outlined the guarantees made that turned out to be deceptive or false.
Brian Grossman, an investor on the hedge fund PFM Well being Sciences, who was additionally a witness in Ms. Holmes’s trial, testified that Mr. Balwani supplied his staff with monetary projections that far overstated Theranos’s projected income.
“When Mr. Balwani communicates with an investor, it’s for a objective, and the aim is to deceive them to get cash,” Mr. Schenk stated.
Prosecutors additionally emphasised Mr. Balwani’s position in operating Theranos’s lab, which the manager had referred to as a “catastrophe zone” in a 2014 textual content message used as proof. Mr. Balwani would additionally “take away dissent” by intimidating or pushing out staff who expressed concern about Theranos exams, like Dr. Adam Rosendorff, a former lab director who testified in each trials, Mr. Schenk stated
Notably absent from the witness stand had been James Mattis, a former protection secretary and Theranos board member, and Ms. Holmes, who had each testified in Ms. Holmes’s trial. Mr. Balwani didn’t testify in his personal protection.
If convicted, Mr. Balwani and Ms. Holmes might be sentenced collectively in September.
