In closing arguments, which began Tuesday and spanned nearly four days, the prosecution sought to highlight the many ways in which it alleges former Theranos COO and president Ramesh “Sunny” Balwani directly helped defraud investors and patients alongside Holmes over the course of several years. Prosecutors pointed to various emails, text messages and witness testimony reviewed during the trial that highlighted Balwani’s integral roles at the company and his intimate knowledge of the startup’s failings.
The defense, meanwhile, argued the government had cherry-picked information and lacked sufficient evidence to prove its case. It ticked off the many high-profile people who, like Balwani, were said to believe in Theranos and Holmes, and who, like Balwani, invested time and money in the business.
Balwani’s fate will be decided by a jury of 12 people. Some jurors took copious notes while others stared intently as the attorneys took turns presenting their final arguments.
Like Holmes, Balwani faces up to 20 years in prison as well as a fine of $250,000 plus restitution for each federal wire fraud and conspiracy count. Balwani, who faces 12 counts in total, has pleaded not guilty.
Holmes, whose trial spanned four months including jury deliberations, was found guilty of four charges related to dealings with investors, but the jury acquitted her of charges tied to defrauding patients. (There were three additional wire fraud counts tied to other investors that jurors couldn’t agree on and for which the judge declared a mistrial. One charge tied to a patient was tossed due to an error by the prosecution.)
A force behind the scenes at Theranos
Balwani, now 57, came to the United States on a student visa and enjoyed a successful career in the software industry before ultimately starting his own e-commerce company. After a sale that resulted in his not needing to work, according to his attorney, he went to school for an MBA. In 2002, he met Holmes, nearly 20 years his junior, while the two were in a program in Beijing to learn Mandarin. In 2004, Holmes dropped out of her sophomore year at Stanford University to work on Theranos.
By 2005, the two were living together. Balwani took a formal role at Theranos in 2009, after guaranteeing a $10 million loan to the company. Their relationship was largely kept hidden from investors, employees and business partners.
“He impacted everything about who I was, and I don’t fully understand that,” Holmes testified.
More recently, the relationship between Balwani and Holmes was depicted prominently in “The Dropout,” a limited series that premiered on Hulu before his trial got underway.
Still, Balwani’s trial attracted significantly less attention than the one for Holmes, which drew early morning crowds on a number of days, including when she took the stand to testify.
The government’s case
In its opening statements in late March, the government mapped out its case against Balwani, which largely echoed its case against Holmes.
“This is a case about fraud, about lying and cheating to obtain money and property,” assistant US attorney Robert Leach told jurors, adding that Balwani and Holmes “were partners in everything, including their crimes.”
Leach argued there were “misrepresentations and half-truths” made to the media, to business partners, and to investors to get money for Theranos. Leach noted that Balwani and Holmes drew “fame and adoration” with their claims and their ability to elevate the company’s profile, but that they “knew the rosy falsehoods that they were telling investors were contrary to the reality within Theranos.”
In closing arguments, assistant US attorney Jeffrey Schenk ticked off the various important parts of the company which Balwani helped run and which were key to the alleged fraud, including overseeing its lab and being responsible for its relationship with Walgreens. Balwani, like Holmes, also communicated directly with some investors who testified during the trial.
“Balwani is not a victim. He’s a perpetrator of the fraud .. Mr. Balwani knows that the biggest threat to fraud is the truth,” said Schenk, pointing to witness testimonies about how he “removed dissent,” or former employees who once raised issues about Theranos’ operations.
The defense pointed the finger at others, including Holmes, to make its case to jurors.
“Sunny Balwani did not start Theranos, he did not control Theranos, he did not have final business decision-making authority at Theranos,” said attorney Stephen Cazares, of Orrick, Herrington & Sutcliffe in its opening statements.
The defense underscored Balwani’s background, his strengths and credentials, in a bid to convince jurors he lacked any intent to deceive. It pointed to Balwani’s prior professional and financial success and to his decision not to join the startup until several years after Holmes founded the company.
“He joined Theranos because he believed in Theranos’ technology and the groundbreaking mission. He didn’t join Theranos because Elizabeth was his girlfriend,” said Cazares, who noted Balwani’s devotion to bringing “a great idea” to life. “Sunny worked 24 hours a day, seven days a week for over six years to try to make it a success.”
In closing arguments, defense attorney Jeffrey Coopersmith of Orrick, Herrington & Sutcliffe stressed that Balwani was in good company when it came to those who had bought 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 was Theranos’ first board member.
Balwani worked at Theranos until May 2016, when he left the company amid growing scrutiny.
According to jury consultant Jill Huntley Taylor, Balwani likely faces different perceptual hurdles than Holmes did in the eyes of the jurors who deliberated over her case. “It would be harder for jurors to believe that someone of his age, stature, experience, and personality, from what the employees [have said], would be turning everything over to Elizabeth Holmes to be the sole decision maker,” Huntley Taylor said.
“In a scientific fraud case, what this is, you need to have the scientific data,” Coopersmith said in his closing statement.
The defense called just two witnesses to testify during its case — an Arizona doctor and a technical consultant who testified about the database. In response to a government subpoena, Theranos in 2018 turned over an encrypted hard drive with a password but there was a separate private key necessary to access the database itself, according to the court testimony. The government didn’t discover until later that it needed the separate key. Meanwhile, after turning over the encrypted drive, Theranos had ordered the physical server housing the database be dismantled so the government never ultimately was able to review the material.
Schenk, in the government’s closing arguments, sought to convince jurors that the missing database is a red herring. “It’s speculating. It’s asking you to assume that the evidence within LIS [the Laboratory Information System database] would be helpful to Mr. Balwani. … Pause for a moment and just appreciate that.”
Another notable difference between the two trials: Unlike Holmes, Balwani did not take the stand.
“That is his constitutional right, and it cannot be used in any way against him or to determine that he’s guilty of anything,” Coopersmith told jurors.
Mark MacDougall, a white-collar defense lawyer and former federal prosecutor, said “an acquittal in a white collar trial, in which the defendant does not testify, is fairly rare.” As he put it, “the central question for the jury is almost always intent — and they want to hear from the defendant.”
— CNN’s Rishi Iyengar and Augie Martin contributed reporting