Elizabeth Holmes has been convicted, but former Theranos COO Sunny Balwani is now on trial.
3/22/2022
SAN JOSE, Calif. — You’d be forgiven for thinking the Theranos drama had ended with the conviction of Elizabeth Holmes. But if you’ve been watching "The Dropout," you’re probably aware that former Theranos COO Ramesh “Sunny” Balwani played a pivotal role in the company’s implosion. Just how pivotal is the question at the heart of Balwani’s trial, which began today in U.S. District Court in San Jose, Calif.
During the Holmes trial, reporters arrived to the courthouse at 4 a.m. to secure a seat. During today's proceedings, there were empty seats in the courtroom. Apparently, nobody cares about “Elizabeth Holmes’ ex-boyfriend.”
Theranos’ former COO faces the same charges as Holmes: 10 counts of wire fraud and two counts of conspiracy to commit wire fraud. Balwani has pleaded not guilty to all charges.
A quick Holmes trial recap: Holmes and Balwani were romantically involved for more than a decade, without disclosing that relationship to investors or clients. During her trial, Holmes claimed Balwani was abusive and scheduled her life. Balwani denies those claims, and they won’t be considered in this trial. But Holmes’ defense team painted Balwani as the villain in the Theranos saga, claiming that he knew better than Holmes what was happening in the Theranos lab and that his inaccurately rosy claims were passed on to potential clients and investors.
The prosecution argued that Balwani and Holmes were a team. “They were partners in everything, including their crimes,” prosecutor Robert Leach said during opening arguments on Tuesday.
The prosecution will lay out its argument in three parts: First, Theranos’ miniature blood analyzer, which Holmes and Balwani nicknamed Edison, was not as useful or accurate as they claimed. Second, Theranos convinced reporters to write stories that would raise the company’s profile. Holmes and Balwani then worked together to use that media profile, along with false claims about Edison, to bilk millions of dollars from investors and patients.
Leach argued that Balwani misled and spoke “half truths” about Theranos’ relationship with major pharmaceutical companies and the Department of Defense to woo investors.
Balwani’s defense is that Theranos was Elizabeth Holmes’ brainchild. “Sunny Balwani did not start Theranos, he did not control Theranos, he did not have final decision making authority at Theranos,” Balwani attorney Stephen Cazares argued Tuesday.
It was Holmes who had cultivated relationships at the Department of Defense and with major pharmaceutical companies, the defense said — long before Balwani ever joined the company in 2009.
The defense also blamed Walgreens and Theranos’ scientists, claiming that Balwani was only a messenger, at worst blinded by his belief in the company’s future. Balwani “never intended to deceive anybody,” Cazares argued.
A third — and possibly the most interesting — argument from Balwani’s defense is that the government was to blame for not doing its due diligence. Theranos handed over a hard drive to the Department of Justice with encrypted test data covering more than 9 million patient results back in 2018. The DOJ didn’t analyze that database, and therefore, Cazares argued, the government cannot definitively say how well or not well Theranos’ technology worked. That’s one we haven’t heard before.
The trial will unfold over the next three months. Here’s what to expect: The first witness, Erika Cheung, was called to the stand shortly after opening arguments. The former Theranos lab associate became a whistleblower when she reported that company’s technology consistently failed quality control tests.
During the Holmes trial, Cheung said that the tests were about as accurate as a coin toss, but we didn’t hear any such bombshells on Tuesday. Court ended only partway through the prosection’s questioning, so we’ll be hearing a lot more from her today.
Defrauded investors, retailers, former lab directors and pharmaceutical company executives are expected to take the stand.
Holmes is also on the witness list, but neither the prosecution or defense mentioned her testifying in opening arguments, so it’s unclear whether she’ll actually appear.
Holmes and the Theranos drama have been the stars of a book, podcast, documentary and now a TV show. Holmes’ attorneys argued that Balwani was the real villain of the story. Prosecutors will argue: Why not both?
Protocol Link: https://www.protocol.com/bulletins/sunny-balwani-trial
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