Elizabeth Holmes’ ghost towered over the opening day of a lawsuit that will determine whether Ramesh “Sunny” Balwani, her former romantic and business partner at Theranos, was also her partner in crime.
Tuesday marked the opening of a case set to begin last week, which was delayed by a Covid-19 exposure.
In opening statements, a federal prosecutor portrayed Balwani as an instrumental accomplice who helped Holmes carry out a huge scam linked to Theranos’ blood test technology.
Balwani’s lawyer countered by casting Balwani as a knowledgeable and well-meaning leader who poured millions of his own dollars into Theranos because he so fervently believed the Silicon Valley company would revolutionize healthcare.
Balwani’s trial began two and a half months after another jury found Holmes guilty of four charges of investor fraud, while acquitting her of four other charges, accusing her of tricking patients into the effectiveness of Theranos’ blood tests.
Although Balwani gets a separate trial on similar criminal charges, it quickly became clear that Holmes, even though he was not in the courtroom, would be a prominent figure in the trial.
Holmes’ name appeared repeatedly during federal prosecutor Robert Leach’s approximately 50-minute opening statement to the jury, as did her picture on screens placed around the courtroom, including exhibits in front of Balwani.
“You will see how they were partners in everything, including their crimes,” Leach said of the alliance between Holmes, 38, and Balwani, 57.
Balwani’s lawyer, Stephen Cazares, also referred to Holmes several times during his 90-minute presentation, but mostly in a way that was intended to cast Balwani as an already successful entrepreneur who had left the company in better shape than then he came to it while providing a desperately needed infusion of cash.
Although Balwani became romantically involved with Holmes around the same time she founded Theranos after dropping out of Stanford University in 2003, Cazares stressed that Balwani only started working in the company in 2009. At that time, Cazares said, Balwani put 10 mio. his own money to guarantee a loan to Theranos before investing another $ 5 million to buy a stake in the company. That share eventually became worth $ 500 million on paper.
“Sunny believed in Theranos, its technology and its mission,” said Cazares, a former federal prosecutor.
In 2010, Balwani became Theranos’ chief operating officer, a job he held until 2016, when he left the company amid revelations of serious flaws in a technology that Theranos had boasted could scan for hundreds of potential health problems with just a few drops of blood. These bold and ultimately false claims helped Theranos raise nearly $ 1 billion. USD and enter into lucrative deals with Walgreens and Safeway before it all worked out and the company collapsed.
While Cazares told the jury that Balwani had gotten the job at Theranos because of his past successes, Leach tried to portray him as unqualified to oversee a company trying to develop a medical device.
“What he had is a connection to Elizabeth Holmes,” Leach said of Balwani.
The close relationship between Holmes and Balwani also appeared frequently during Holmes’ trial, including text messages between the two former girlfriends. Leach indicated that some of the same texts would be presented as evidence during Balwani’s trial. He also telegraphed that many of the same witnesses who were called to testify against Holmes were likely to reappear in these trials.
Holmes’ trial included a dramatic afternoon in which she tearfully accused Balwani of being a sometimes dominant figure in her life, exposing her to emotional and sexual abuse. One of Balwani’s other lawyers vehemently denied these allegations during Holmes’ trial, and Cazares urged jurors in the current trial to discard everything they could remember reading or hearing about them.
“The headlines and sensational stories about Elizabeth Holmes have no place in this lawsuit,” Cazares said.
Holmes risks up to 20 years in prison, but is free on $ 500,000 bail while awaiting her sentencing scheduled for September. It has raised speculation that Holmes could agree to testify against Balwani in exchange for a recommendation for leniency, even though it is considered a remote possibility.
Without an appearance by Holmes, Balwani’s trial seems unlikely to attract the intense attention from her trial, which lasted from September last year to her January verdict. It was clear early Tuesday that only a few people were queuing to enter the courthouse about an hour before it opened. This was in stark contrast to Holmes’ trial, which attracted long lines of people early in the morning hoping to enter the courtroom.
Balwani’s trial is expected to run for the next three months.