Elizabeth Holmes, Theranos CEO, sat in courtroom as the first day of a trial began. This trial will decide if her ex-partner and business partner Ramesh Balwani was her partner in crime.
Opening statements Tuesday were delivered by a federal prosecutor who described Balwani, as an accomplice in a massive fraud tied to Theranos blood-testing technology.
Balwani’s lawyer reacted by portraying Balwani as a smart and well-meaning executive who invested millions of dollars in Theranos because he believed that the Silicon Valley company would revolutionize healthcare.
Balwani’s trial began two and a half months after Holmes was found guilty by another jury. She was also acquitted on four charges of investor fraud. The latest trial was scheduled to begin last week, but was postponed after someone in the courtroom had been exposed to COVID-19.
Balwani will be facing a separate criminal trial for similar charges. However, it became apparent that Holmes’ shadow is likely to hang in the background.
During Robert Leach, the federal prosecutor,’s approximately 50-minute opening testimony to the jury, Holmes’ name was mentioned repeatedly. Her picture was also displayed on screens around the courtroom, including one in front of Balwani.
Leach spoke out about the romantic and business partnership between Holmes, now 38 and Balwani at 57.
Stephen Cazares (Balwani’s lawyer) also made numerous references to Holmes in his 90-minute presentation. However, these were mostly meant to portray Balwani, an already successful entrepreneur, as someone who left the company in better condition than when he joined, while still providing a much-needed infusion of cash.
Balwani fell in love with Holmes at Theranos, shortly after she graduated from Stanford University in 2003. However, Cazares stressed that Balwani hadn’t started working at Theranos until 2009. Cazares stated that Balwani had invested $10 million of his personal money in Theranos to guarantee a loan, before investing $5 million to purchase a stake. The stake was eventually worth $500 million.
Cazares, a former federal prosecutionsor, stated that Sunny believed in Theranos’ technology and mission.
Balwani was named Theranos’ chief operational officer in 2010. He held that position until Holmes fired him in May 2016. Holmes discovered serious flaws with their technology, which they claimed could scan for hundreds of possible health problems using just a few drops of blood. These bold, but ultimately false claims helped Theranos raise almost $1 billion and struck lucrative deals with Walgreens.
Holmes, who had a fortune of $4.5 Billion before Theranos collapsed, was being hailed as a visionary and was nine times larger than Balwani’s stake.
Cazares said that Balwani was selected for Theranos because of his previous successes. Leach, however, tried to portray Balwani as someone who wasn’t qualified to oversee a company trying to develop a medical device.
Leach stated that Balwani had a connection with Elizabeth Holmes.
During Holmes’ trial, the close relationship between Holmes & Balwani was brought up again and again. This included text messages between the former lovers. Leach indicated that some of these same texts would be used as evidence in Balwani’s trial. Telegraphing that Holmes witnesses who were called to testify against him are likely to be back in these proceedings, Leach also indicated.
The trial of Holmes also featured a dramatic scene in which Holmes wept as she accused Balwani of being a controlling figure in her life, who subjected Holmes to emotional and sexual abuse. Cazares asked jurors in the current trial not to recall any information or statements they might have heard about those allegations by Balwani.
Cazares stated that “the headlines and sensational stories concerning Elizabeth Holmes have no place at this trial.”
Holmes could spend up to 20 years behind bars, but she is currently free on $500,000 bail as she awaits her September sentencing. This has led to speculation that Holmes may be willing to testify against Balwani in return for a recommendation of leniency. However, this is still a distant possibility.
Balwani’s trial without Holmes is unlikely to draw the same attention as her trial. It lasted from September last year to her January conviction. This was evident on Tuesday morning, when only a handful of people waited to enter the courthouse just an hour before it opened. This was in sharp contrast to Holmes’ trial which saw people queue up for more than five hours prior to the San Jose, California courthouse opening.
Balwani’s trial will continue for three months.