For months, Ramesh Balwani’s lawyers have tried to single him out from Elizabeth Holmes, his former girlfriend and business partner at bankrupt blood testing company Theranos.
Ms Holmes was found guilty of defrauding the start-up’s investors in January. Mr. Balwani is seeking a different outcome in his own fraud trial.
But on Tuesday, in closing statements from Mr. Balwani’s trial, prosecutors linked him directly to Ms. Holmes and the years-long fraud at Theranos. Jeffrey Schenk, assistant US attorney and lead prosecutor on the case, posted a text message Mr Balwani sent to Ms Holmes in 2015 that was used as evidence in the trial.
“I am responsible for everything at Theranos,” Mr. Balwani wrote. “All were my decisions too.”
The text message was an admission of guilt, Mr Schenk said, adding: ‘He acknowledges his role in the fraud.’
The presentation capped more than three months of testimony in Mr. Balwani’s trial, which largely mirrored that of Ms. Holmes last fall. Ms Holmes and Mr Balwani, 57, were accused in 2018 of exaggerating the capabilities of Theranos’ blood-testing machines and business performance when, in fact, the products didn’t work and its business was struggling. The duo pleaded not guilty. Ms Holmes was convicted on four of the 11 counts.
The trial of Mr Balwani, known as Sunny, lacked the fanfare of the high-profile case of Ms Holmes. It nonetheless serves as a coda to a waning era of start-up growth that often relied on hype and hyperbole. Ms. Holmes and Mr. Balwani are among the very few tech executives who have ever been prosecuted for fraud.
Just as Ms. Holmes tried to blame others for Theranos’ deceptions, Mr. Balwani pointed the finger at her. Throughout the trial, his attorneys argued that many of Theranos’ blood tests worked. And they said Ms. Holmes controlled Theranos, not Mr. Balwani. They were due to begin their closing arguments later on Tuesday.
Ms Holmes, now 38, met Mr Balwani when she was 18. They started dating years later, after Ms Holmes founded Theranos. In 2009, Mr. Balwani invested in Theranos and became its chief executive, eventually taking charge of his lab. The couple kept their relationship a secret and lived together in a sprawling house they owned in Atherton, California.
In 2016, after Theranos was criticized for lying about its blood testing abilities, Mr Balwani left the company and parted ways with Ms Holmes. The pair were charged with fraud together, but Ms Holmes pleaded in papers to separate the cases and accused Mr Balwani of emotional and sexual abuse. His trial included dramatic testimony chronicling the charges. This subject was excluded from Mr. Balwani’s trial.
To convict Mr. Balwani, prosecutors must convince jurors that he intentionally lied to investors and patients about Theranos blood tests and business dealings.
Prosecutors tried to blame Mr. Balwani for the financial projections Theranos showed investors and the state of its labs. The new witnesses included investors and executives who dealt directly with Mr Balwani, rather than Ms Holmes.
A projection, presented to investors in October 2014, showed that Theranos would bring in $140 million that year. In reality, income was limited. The following year, Mr. Balwani predicted nearly $1 billion in revenue from presentations to investors. Theranos’ internal projections were much lower, according to the evidence, and the reality was closer to zero.
A new witness, Patrick Mendenhall, who dealt directly with Mr. Balwani during an investment in Theranos, described promises made that turned out to be misleading or false.
Brian Grossman, an investor in the hedge fund PFM Health Sciences, who was also a witness in Ms. Holmes’ trial, said Mr. Balwani provided his team with financial projections that grossly exaggerated Theranos’ projected revenue.
“When Mr. Balwani communicates with an investor, it is for a purpose, and the purpose is to deceive him to get money,” Mr. Schenk said.
Prosecutors also pointed to Mr. Balwani’s role in running the Theranos lab, which the executive called a “disaster zone” in a 2014 text message used as evidence. Mr. Balwani would also “suppress dissent” by intimidating or pushing back employees who have expressed concern about Theranos testing, such as Dr. Adam Rosendorff, a former lab director who testified in both lawsuits, Mr. Schenk.
Notable absentees from the witness stand were James Mattis, a former defense secretary and member of the Theranos board of directors, and Ms Holmes, who had both testified at Ms Holmes’ trial. Mr. Balwani did not testify in his own defence.
If found guilty, Mr Balwani and Ms Holmes will be sentenced together in September.