For months, Ramesh Balwani’s legal professionals have tried to differentiate 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 special final result in his personal fraud trial.
But on Tuesday, in closing arguments to Mr. Balwani’s jury, 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 in the case, displayed a textual content message that Mr. Balwani had despatched Ms. Holmes in 2015 and that had been used as proof in the trial.
“I am responsible for everything at Theranos,” Mr. Balwani wrote. “All have been my decisions too.”
The textual content was an admission of guilt, Mr. Schenk stated, including, “He’s acknowledging his role in the fraud.”
The presentation capped greater than three months of testimony in Mr. Balwani’s trial, which largely mirrored Ms. Holmes’s final fall. She and Mr. Balwani, 57, had been charged in 2018 with exaggerating the talents of Theranos’s blood-testing machines and enterprise efficiency when, in reality, the merchandise didn’t work and its enterprise was struggling. The pair pleaded not responsible. Ms. Holmes was convicted on 4 of 11 expenses.
The trial for Mr. Balwani, who is called Sunny, lacked the fanfare of Ms. Holmes’s case. It nonetheless serves as a coda to a waning period of start-up progress that usually relied on hype and hyperbole. Ms. Holmes and Mr. Balwani are among the many few tech executives who’ve ever been prosecuted on fraud expenses.
Just as Ms. Holmes tried blaming the deceptions at Theranos on others, Mr. Balwani has pointed the finger again at her. Throughout the trial, his legal professionals argued that many of Theranos’s blood assessments had labored. They stated Ms. Holmes, not Mr. Balwani, had managed Theranos. And on Tuesday, they painted Mr. Balwani as a real believer in the imaginative and prescient and expertise of Theranos.
Mr. Balwani “put his heart and soul into Theranos,” stated Jeffrey Coopersmith, who represents him. “He worked tirelessly, year after year, to make the company a success.”
Ms. Holmes, now 38, met Mr. Balwani when she was 18. They started relationship years later, after Ms. Holmes had based Theranos. Mr. Balwani joined Theranos in 2009, grew to become its chief working officer, and ultimately invested $4.6 million in the corporate and took cost of its lab. The pair saved their relationship a secret and lived collectively in an expansive dwelling they co-owned in Atherton, Calif.
In 2016, after Theranos got here below hearth for mendacity about its blood testing talents, Mr. Balwani left the corporate and cut 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 the jurors that he deliberately lied to traders and sufferers about Theranos’s blood assessments and enterprise dealings.
Prosecutors tried placing the blame on Mr. Balwani for monetary projections that Theranos confirmed to traders and the situation of its labs. New witnesses included traders and executives who dealt immediately with Mr. Balwani, relatively than Ms. Holmes.
One projection, offered to traders in October 2014, confirmed Theranos would convey in $140 million that 12 months. In actuality, income was $150,000. The subsequent 12 months, Mr. Balwani projected practically $1 billion in income in pitches to traders. Theranos’s inner projections had been a lot decrease, proof confirmed, and the fact was $429,210.
Mr. Schenk stated Theranos’s leaders had directed its scientists to validate blood assessments and start providing assessments to the general public solely when it wanted cash from traders or prospects. “Not when the science was ready,” he stated.
A brand new witness, Patrick Mendenhall, who dealt immediately with Mr. Balwani whereas investing in Theranos, outlined the guarantees that turned out to be deceptive or false.
Brian Grossman, an investor on the hedge fund PFM Health Sciences, who was additionally a witness in Ms. Holmes’s trial, testified that Mr. Balwani had offered his group with monetary projections that far overstated Theranos’s projected income.
“When Mr. Balwani communicates with an investor, it’s for a purpose, and the purpose is to deceive them to get money,” Mr. Schenk stated.
Prosecutors additionally emphasised Mr. Balwani’s function in working Theranos’s lab, which the manager known as a “disaster zone” in a 2014 textual content message. Mr. Balwani would additionally “remove dissent” by intimidating or pushing out staff who expressed concern about Theranos assessments, like Dr. Adam Rosendorff, a former lab director who testified in each trials, Mr. Schenk stated.
Mr. Coopersmith, the protection lawyer, stated that the federal government had painted a “highly misleading” image of Mr. Balwani’s time at Theranos and that it was unfair to point out out-of-context personal texts as proof of a conspiracy.
The messages didn’t present Mr. Balwani telling anybody to commit fraud, Mr. Coopersmith stated. “If there was a conspiracy, you’d think there would be all kinds of conspiratorial, sinister conversations, and there just isn’t,” he 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 protection.
If he’s convicted, Mr. Balwani and Ms. Holmes shall be sentenced collectively in September.
Erin Woo contributed reporting.