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12th July 2022

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The legal fraud case of Elizabeth Holmes’ extinct second-in-disclose heads to jury

(CNN Enterprise)The legal fraud trial of Elizabeth Holmes’ ex-boyfriend and extinct second-in-disclose at Theranos is heading to the jury, roughly three months after it kicked off in the same San Jose, California, courthouse the assign she became as soon as came upon guilty on four costs of defrauding traders.

In closing arguments, which began Tuesday and spanned virtually four days, the prosecution sought to highlight the an limitless sequence of programs in which it alleges extinct Theranos COO and president Ramesh “Sunny” Balwani directly helped defraud traders and patients alongside Holmes over the course of several years. Prosecutors pointed to plenty of emails, text messages and watch testimony reviewed right thru the trial that highlighted Balwani’s integral roles on the firm and his intimate records of the startup’s failings.

The protection, meanwhile, argued the authorities had cherry-picked records and lacked enough proof to checklist its case. It ticked off the an limitless sequence of excessive-profile these that, like Balwani, hold been said to imagine in Theranos and Holmes, and who, like Balwani, invested money and time in the commerce.

    Balwani’s fate will most likely be made up our minds by a jury of 12 of us. Some jurors took copious notes whereas others stared intently as the attorneys took turns presenting their closing arguments.

      Elizabeth Holmes' No. 2 and ex-boyfriend is about to have his day in court

      Theranos attracted most fundamental investor and media interest with the promise that it might maybe presumably well well precisely and effectively behavior a vary of tests the usage of appropriate about a drops of blood taken from the fingertip. At its height, the startup became as soon as valued at an conception-popping $9 billion, having raised $945 million in financing from outstanding traders including media tycoon Rupert Murdoch and Walmart’s Walton family. Theranos moreover secured retail partnerships with Walgreens and Safeway.

          Nevertheless the firm began to solve after an October 2015 Wall Avenue Journal investigation first revealed cracks in its technology and claims. Holmes and Balwani hold been indicted collectively on a dozen legal fraud costs in June 2018, however their circumstances hold been severed when Holmes made certain she’d level a finger at Balwani in her trial.

          Cherish Holmes, Balwani faces as much as 20 years in jail as properly as a comely of $250,000 plus restitution for every federal wire fraud and conspiracy depend. Balwani, who faces 12 counts in total, has pleaded no longer guilty.

          Former Theranos COO Ramesh

          Holmes, whose trial spanned four months including jury deliberations, became as soon as came upon guilty of four costs linked to dealings with traders, however the jury acquitted her of costs tied to defrauding patients. (There hold been three additional wire fraud counts tied to other traders that jurors might maybe presumably well well no longer agree on and for which the mediate declared a mistrial. One fee tied to a affected person became as soon as tossed as a consequence of an error by the prosecution.)

          Holmes’ sentencing has been location for slow September to enable enough time for Balwani’s trial to be accomplished. Make a selection Edward Davila presided over both circumstances.

          A power in the attend of the scenes at Theranos

          While Balwani became as soon as an integral half of Theranos and a partner to Holmes right thru her time working the firm, he largely flew under the radar in comparison to her. Holmes became as soon as featured on magazine covers and upheld as a rare female founder to catapult her commerce to a billion-greenback valuation.

          Balwani, now 57, came to the united states on a pupil visa and enjoyed a successful career in the instrument industry sooner than sooner or later initiating his hold e-commerce firm. After a sale that resulted in his no longer needing to work, in keeping along with his legal professional, he went to varsity for an MBA. In 2002, he met Holmes, virtually 20 years his junior, whereas the two hold been in a program in Beijing to study Mandarin. In 2004, Holmes dropped out of her sophomore Twelve months at Stanford University to work on Theranos.

          By 2005, the two hold been dwelling collectively. Balwani took a formal goal at Theranos in 2009, after guaranteeing a $10 million mortgage to the firm. Their relationship became as soon as largely kept hidden from traders, workers and commerce companions.


          Taking the stand in her hold protection right thru her trial, Holmes testified she became as soon as the victim of a decade-long abusive relationship with Balwani, whom she said she first grew shut to as she sought his commerce enter sooner than their relationship turned romantic. She testified he exerted wide decide watch over over her, prescribing a restrictive lifestyle and image, which he positioned as serving to her earn success as an entrepreneur. At instances, she alleged in testimony, he compelled her to hold sex with him. Balwani’s attorneys hold strongly denied the allegations.

          “He impacted every little thing about who I became as soon as, and I form no longer fully realize that,” Holmes testified.

          Extra currently, the connection between Balwani and Holmes became as soon as depicted prominently in “The Dropout,” a puny sequence that premiered on Hulu sooner than his trial purchased underway.

          Tranquil, Balwani’s trial attracted tremendously less attention than the one for Holmes, which drew early morning crowds on a sequence of days, including when she took the stand to testify.

          The authorities’s case

          In its opening statements in slow March, the authorities mapped out its case against Balwani, which largely echoed its case against Holmes.

          “Here’s a case about fraud, about lying and dishonest to manufacture money and property,” assistant US legal professional Robert Leach told jurors, adding that Balwani and Holmes “hold been companions in every little thing, including their crimes.”

          Leach argued there hold been “misrepresentations and half-truths” made to the media, to commerce companions, and to traders to gain money for Theranos. Leach renowned that Balwani and Holmes drew “reputation and adoration” with their claims and their skill to raise the firm’s profile, however that they “knew the rosy falsehoods that they hold been telling traders hold been opposite to the truth interior Theranos.”

          Elizabeth Holmes sentencing hearing set for September 26

          The authorities went on to call two dozen witnesses to plan its case, including patients, traders, extinct workers and commerce companions. Most moreover testified right thru Holmes’ trial, including Theranos whistleblower Erika Cheung, and several other extinct lab directors. Other witnesses included Lisa Peterson, who helped vet a deal for the billionaire family of extinct US Training Secretary Betsy DeVos, and Daniel Mosley, a outstanding attorney who became as soon as launched to Theranos thru his longtime client Henry Kissinger, the extinct Secretary of Mumble who as soon as served on the board of the firm. (Mosley went on to introduce a sequence of his customers to Holmes and Theranos, including the DeVos family.)

          Balwani’s trial, nonetheless, lacked about a of the big name energy of Holmes’ trial, which seen onetime Theranos board member James Mattis, the extinct US Secretary of Protection, as properly as extinct CEO of Safeway Steve Burd take the stand.

          In closing arguments, assistant US legal professional Jeffrey Schenk ticked off the an limitless sequence of powerful parts of the firm which Balwani helped lag and which hold been key to the alleged fraud, including overseeing its lab and being accountable for its relationship with Walgreens. Balwani, like Holmes, moreover communicated directly with some traders who testified right thru the trial.

          “Balwani is no longer a victim. He’s a perpetrator of the fraud .. Mr. Balwani knows that the supreme threat to fraud is the truth,” said Schenk, pointing to look at testimonies about how he “removed dissent,” or extinct workers who as soon as raised issues about Theranos’ operations.

          Former Theranos COO Ramesh

          The protection

          The protection pointed the finger at others, including Holmes, to plan its case to jurors.

          “Sunny Balwani did no longer commence Theranos, he did no longer decide watch over Theranos, he did no longer hold closing commerce resolution-making authority at Theranos,” said legal professional Stephen Cazares, of Orrick, Herrington & Sutcliffe in its opening statements.

          The protection underscored Balwani’s background, his strengths and credentials, in a enlighten to persuade jurors he lacked any intent to deceive. It pointed to Balwani’s prior professional and financial success and to his resolution no longer to affix the startup unless several years after Holmes based mostly the firm.

          “He joined Theranos because he believed in Theranos’ technology and the groundbreaking mission. He did no longer be half of Theranos because Elizabeth became as soon as his female friend,” said Cazares, who renowned Balwani’s devotion to bringing “a gigantic conception” to lifestyles. “Sunny labored 24 hours a day, seven days per week for over six years to test out to plan it a success.”

          In closing arguments, protection legal professional Jeffrey Coopersmith of Orrick, Herrington & Sutcliffe stressed that Balwani became as soon as in only firm when it came to of us who had equipped into Holmes’ vision. Early backers of Holmes included Oracle founder Larry Ellison and legendary Silicon Valley investor Don Lucas; Stanford University chemical engineering professor Channing Robertson became as soon as Theranos’ first board member.

          Balwani labored at Theranos unless Might 2016, when he left the firm amid rising scrutiny.

          In step with jury manual Jill Huntley Taylor, Balwani likely faces diversified perceptual hurdles than Holmes did in the eyes of the jurors who deliberated over her case. “It’d be more difficult for jurors to imagine that any individual of his age, stature, abilities, and persona, from what the workers [have said], might maybe presumably well well be turning every little thing over to Elizabeth Holmes to be the sole resolution maker,” Huntley Taylor said.

          The protection moreover sought to roam holes in the authorities’s case by underscoring that it never got the firm’s finding out sage database to checklist its allegation about Theranos’ puny technology functionality. Discussion throughout the misplaced database became as soon as largely kept out of the courtroom right thru Holmes’s trial.

          “In a scientific fraud case, what here’s, you potentially can will have to hold the scientific records,” Coopersmith said in his closing observation.

          The protection called appropriate two witnesses to testify right thru its case — an Arizona doctor and a technical manual who testified about the database. In response to a authorities subpoena, Theranos in 2018 turned over an encrypted arduous pressure with a password however there became as soon as a separate non-public key needed to gain entry to the database itself, in step with the court testimony. The authorities did no longer leer unless later that it wished the separate key. In the meantime, after turning over the encrypted pressure, Theranos had ordered the bodily server housing the database be dismantled so the authorities never sooner or later became as soon as in a space to test the fabric.

          Schenk, in the authorities’s closing arguments, sought to persuade jurors that the lacking database is a crimson herring. “It be speculating. It be asking you to know that the proof interior LIS [the Laboratory Information System database] might maybe presumably well well be priceless to Mr. Balwani. … Dwell for a moment and appropriate relish that.”

          One other famous inequity between the two trials: Not like Holmes, Balwani did no longer take the stand.

          “That’s his constitutional edifying, and it could not be feeble in any formula against him or to search out out that he’s guilty of one thing,” Coopersmith told jurors.

            Label MacDougall, a white-collar protection attorney and extinct federal prosecutor, said “an acquittal in a white collar trial, in which the defendant does no longer testify, is slightly rare.” As he place it, “the central query for the jury is nearly frequently intent — and to boot they have to hear from the defendant.”

            CNN’s Rishi Iyengar and Augie Martin contributed reporting

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