For months, Ramesh Balwani’s lawyers have tried to distinguish him from Elizabeth Holmes, his former girlfriend and business partner at Theranos, a failed blood-testing company.
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 for Mr. Balwani’s trial, prosecutors tied him directly to Ms. Holmes and the yearslong fraud at Theranos. Jeffrey Schenk, an Assistant US Attorney and a lead prosecutor on the case, displayed a text message that Mr. Balwani sent Ms. Holmes in 2015 that was used as evidence in the trial.
“I’m responsible for everything at Theranos,” Mr. Balwani wrote. “All have been my decisions too.”
The text message was an admission of guilt, Mr. Schenk said, adding, “He’s acknowledging his role in the fraud.”
The presentation capped more than three months’ testimony Balwani’s trial, which largely mirrored that of Ms. Holmes’ last fall. Ms. Holmes and Mr. Balwani, 57, was charged in 2018 for exaggerating the capabilities of Theranos’ blood-testing machines and business performance when, in fact, the products didn’t work and his business was struggling. The duo pleaded not guilty. Ms. Holmes was convicted on four of 11 charges.
The trial for Mr. Balwani, who is known as Sunny, lacked the fanfare of Ms. Holmes’ high-profile case. It serves nonetheless as a coda to a waning era of start-up growth that is often relied on hype and hyperbole. Ms. Holmes and Mr. Balwani is among the very few tech executives who have ever been prosecuted for fraud.
Just as Ms. Holmes tried blaming others for the deceptions at Theranos, Mr. Balwani has pointed the finger back at her. Throughout the trial, his lawyers argued that many of Theranos’ blood tests had worked. And they said that Ms. Holmes controlled Theranos, not Mr. Balwani. They were set to begin their closing argument later on Tuesday.
Ms. Holmes, now 38, mr. Balwani when she was 18. They started dating years later, after Ms. Holmes had founded Theranos. In 2009, Mr. Balwani invested in Theranos and became its chief operating officer, eventually taking charge of its lab. The couple kept their relationship secret and lived together in a sprawling home they co-owned in Atherton, Calif.
In 2016, after Theranos came under fire for lying about its blood testing capabilities, Mr. Balwani left the company and split with Ms. Holmes. The pair were charged with fraud together, but Ms. Holmes argued in filings to sever cases and accused Mr. Balwani of emotional and sexual abuse. Her trial also included dramatic testimony recounting the accusations. That subject was excluded from Balwani’s trial.
Mr. convict Balwani, prosecutors must convince jurors that he intentionally lied to investors and patients about Theranos’ blood tests and business dealings.
Prosecutors tried blaming Balwani for financial projections that showed Theranos to investors and the condition of its labs. 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 Theranos would bring in $ 140 million that year. In reality, revenue was limited. The next year, Mr. Balwani projected more than $ 1 billion in revenue into pitches to investors. Theranos’ internal projections were much lower, the evidence showed, and the reality was closer to zero.
A new witness, Patrick Mendenhall, who dealt directly with Mr. While Balwani was making an investment in Theranos, outlines made promises that turned out to be misleading or false.
Brian Grossman, an investor at the hedge fund PFM Health Sciences, who was also a witness in Ms. Holmes’ trial, testified that Mr. Balwani provided his team with financial projections that far overstated Theranos’ projected revenue.
“When Mr. Balwani communicates with an investor, it is for a purpose, and the purpose is to deceive them to get money, “Mr. Schenk said.
Prosecutors also emphasized Balwani’s role in running Theranos’ lab, which the executive had called a “disaster zone” in a 2014 text message used as evidence. Mr. Balwani would also “remove dissent” by intimidating or pushing out employees who expressed concern about Theranos tests, like Dr. Adam Rosendorff, a former lab director who testified in both trials, Schenk said
Notably absent from the witness stand were James Mattis, a former Defense Secretary and Theranos board member, and Ms. Holmes, who was both testified in Ms. Holmes’s trial. Mr. Balwani did not testify in his own defense.
If convicted, Mr. Balwani and Ms. Holmes will be sentenced together in September.