Closing Statements Begin in Trial of Sunny Balwani

For months, Ramesh Balwani’s legal professionals have tried to tell apart him from Elizabeth Holmes, his former girlfriend and enterprise accomplice on the failed blood-testing firm Theranos.

Ms. Holmes was discovered responsible of defrauding the start-up’s buyers in January. Mr. Balwani is in search of a distinct consequence in his personal fraud trial.

However 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 within the case, displayed a textual content message that Mr. Balwani had despatched Ms. Holmes in 2015 and that had been used as proof within the trial.

“I’m chargeable for every thing at Theranos,” Mr. Balwani wrote. “All have been my selections too.”

The textual content was an act of contrition, Mr. Schenk mentioned, 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 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.

Simply as Ms. Holmes tried blaming the deceptions at Theranos on others, Mr. Balwani has pointed the finger again at her. All through the trial, his legal professionals argued that a lot of Theranos’s blood exams had labored. They mentioned Ms. Holmes, not Mr. Balwani, had managed Theranos. And on Tuesday, they painted Mr. Balwani as a real believer within the imaginative and prescient and expertise of Theranos.

Mr. Balwani “put his coronary heart and soul into Theranos,” mentioned Jeffrey Coopersmith, who represents him. “He labored tirelessly, yr after yr, to make the corporate successful.”

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 within the firm and took cost of its lab. The pair saved their relationship a secret and lived collectively in an expansive residence 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 circumstances 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 buyers and sufferers about Theranos’s blood exams and enterprise dealings.

Prosecutors tried placing the blame on Mr. Balwani for monetary projections that Theranos confirmed to buyers and the situation of its labs. New witnesses included buyers and executives who dealt immediately with Mr. Balwani, reasonably than Ms. Holmes.

One projection, offered to buyers in October 2014, confirmed Theranos would herald $140 million that yr. In actuality, income was $150,000. The following yr, Mr. Balwani projected almost $1 billion in income in pitches to buyers. Theranos’s inner projections had been a lot decrease, proof confirmed, and the truth was $429,210.

Mr. Schenk mentioned Theranos’s leaders had directed its scientists to validate blood exams and start providing exams to the general public solely when it wanted cash from buyers or clients. “Not when the science was prepared,” he mentioned.

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 Well being Sciences, who was additionally a witness in Ms. Holmes’s trial, testified that Mr. Balwani had supplied his staff with monetary projections that far overstated Theranos’s projected income.

“When Mr. Balwani communicates with an investor, it’s for a function, and the aim is to deceive them to get cash,” Mr. Schenk mentioned.

Prosecutors additionally emphasised Mr. Balwani’s position in operating Theranos’s lab, which the manager known as a “catastrophe zone” in a 2014 textual content message. Mr. Balwani would additionally “take away dissent” by intimidating or pushing out workers who expressed concern about Theranos exams, like Dr. Adam Rosendorff, a former lab director who testified in each trials, Mr. Schenk mentioned.

Mr. Coopersmith, the protection lawyer, mentioned that the federal government had painted a “extremely deceptive” 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 mentioned. “If there was a conspiracy, you’d suppose there can be every kind of conspiratorial, sinister conversations, and there simply isn’t,” he mentioned.

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 can be sentenced collectively in September.

Erin Woo contributed reporting.

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