For months, Ramesh Balwani’s legal professionals have tried to differentiate 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 traders in January. Mr. Balwani is in search of a distinct consequence 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. lawyer 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’m liable for every little thing at Theranos,” Mr. Balwani wrote. “All have been my choices too.”
The textual content was an admission of guilt, Mr. Schenk mentioned, including, “He’s acknowledging his function 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 skills 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 costs.
The trial for Mr. Balwani, who is named Sunny, lacked the fanfare of Ms. Holmes’s case. It nonetheless serves as a coda to a waning period of start-up progress that always relied on hype and hyperbole. Ms. Holmes and Mr. Balwani are among the many few tech executives who’ve ever been prosecuted on fraud costs.
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 checks had labored. They mentioned 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 know-how 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, turned its chief working officer, and ultimately invested $4.6 million in the corporate and took cost of its lab. The pair stored their relationship a secret and lived collectively in an expansive house they co-owned in Atherton, Calif.
In 2016, after Theranos got here below fireplace for mendacity about its blood testing talents, Mr. Balwani left the corporate and break 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 traders and sufferers about Theranos’s blood checks 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 instantly with Mr. Balwani, fairly than Ms. Holmes.
One projection, introduced to traders in October 2014, confirmed Theranos would deliver in $140 million that yr. In actuality, income was $150,000. The subsequent yr, Mr. Balwani projected practically $1 billion in income in pitches to traders. Theranos’s inside projections had been a lot decrease, proof confirmed, and the fact was $429,210.
Mr. Schenk mentioned Theranos’s leaders had directed its scientists to validate blood checks and start providing checks to the general public solely when it wanted cash from traders or clients. “Not when the science was prepared,” he mentioned.
A brand new witness, Patrick Mendenhall, who dealt instantly 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 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 function in working Theranos’s lab, which the manager referred to as a “catastrophe zone” in a 2014 textual content message. Mr. Balwani would additionally “take away dissent” by intimidating or pushing out staff who expressed concern about Theranos checks, 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 indicate 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 assume there can be all types 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 will probably be sentenced collectively in September.
Erin Woo contributed reporting.