Elizabeth Holmes’s Ex-Boyfriend Set to Go on Trial in Theranos Case

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Elizabeth Holmes was a star entrepreneur whose trial for defrauding buyers in her blood-testing start-up grew to become one of many greatest Silicon Valley spectacles for the reason that introduction of the iPhone. Her conviction in January marked a uncommon second within the boastful historical past of know-how: A chief govt was held criminally answerable for mendacity.

For a lot of her trial, Ms. Holmes sought to blame her deputy and former boyfriend, Ramesh Balwani, for what went incorrect at her firm, Theranos. Now Mr. Balwani, who is called Sunny, could have the chance to reply in his personal fraud trial. Jury choice was scheduled to start on Wednesday in the identical federal courtroom in San Jose, Calif., the place Ms. Holmes’s destiny was decided.

The primary trial supplied, and the second trial guarantees, a detailed examination of an uncommon relationship between a younger lady and an older man. Ms. Holmes and Mr. Balwani had a secret romance that was additionally knowledgeable alliance, an thrilling promise to enhance well being take care of thousands and thousands that as a substitute put sufferers in danger. Their blood testing didn’t work, at the same time as they assumed new and higher know-how would rescue them from their reckless claims.

Mr. Balwani, 57, is a former software program govt who made a fortune in the course of the late Nineteen Nineties dot-com increase. He befriended Ms. Holmes after they have been finding out in China the summer time earlier than her freshman yr at Stanford College. Their romantic relationship finally led him to affix Theranos in 2009 as president and chief working officer.

He was the other of a star, barely talked about within the glowing cowl tales about Ms. Holmes and Theranos. By all proof, nonetheless, Mr. Balwani and Ms. Holmes, now 38, have been a workforce that dominated the start-up tightly. Few knew they have been in a relationship.

“She was the Wizard of Oz, dazzling the buyers and media, however he was the one backstage working the equipment,” mentioned Reed Kathrein, a San Francisco lawyer who efficiently sued Ms. Holmes and Theranos in 2016 on behalf of buyers. He mentioned he was assured the prosecution would present that “he knew she was mendacity and by no means put a cease to it.”

“He knew every thing,” Mr. Kathrein mentioned.

Mr. Balwani’s trial will go over acquainted floor. He faces the identical 12 fees that Ms. Holmes initially confronted. (One depend was dropped after a procedural error by the federal government.) He has pleaded not responsible.

Ms. Holmes was discovered responsible on 4 counts of defrauding buyers and acquitted on 4 counts of defrauding sufferers; the jury deadlocked on the remaining three investor counts. She will likely be sentenced within the fall.

The consensus amongst authorized consultants following the case is that the federal government’s profitable prosecution of Ms. Holmes will give it a lift in Mr. Balwani’s trial.

“​​The federal government has had the chance to do a full run, so they may have realized what labored and what didn’t,” mentioned James Melendres, a former federal prosecutor who represents company purchasers.

Prosecutors, Mr. Balwani and his legal professionals declined to remark. By way of her legal professionals, Ms. Holmes declined to remark.

Whereas Ms. Holmes’s background has been extensively documented, comparatively little is thought about Mr. Balwani, together with why he’s referred to as Sunny.

An skilled software program govt, he had the nice luck to have his start-up bought by a bigger agency proper earlier than the 2000 inventory market crash, yielding him about $40 million. He acquired a divorce, went again to highschool to get an M.B.A. and examine pc science, and acquired fancy automobiles. (His license plate, in a nod to Karl Marx, was DASKPTL.) When he joined Theranos, he invested thousands and thousands of his personal cash in it, his legal professionals have mentioned.

At Theranos, he had a repute for being a harsh, demanding boss who grew to become more and more paranoid that staff would steal commerce secrets and techniques that might supposedly revolutionize blood testing. In an incident recounted by the journalist John Carreyrou, Mr. Balwani referred to as the police to chase after a departing worker, explaining that the previous employee “stole property in his thoughts.”

Mr. Balwani’s legal professionals are anticipated to emphasise his lack of expertise in biomedical units, which have been on the coronary heart of Theranos’s claims. Authorized consultants mentioned he was unlikely to testify. He’d most probably be much less sympathetic on the witness stand than Ms. Holmes, a brand new mom who performed up her youth and arrived in courtroom holding arms along with her mom and her associate.

“He doesn’t have these optics in his favor,” mentioned Ann Kim, a former federal prosecutor who represents corporations present process authorities investigations.

When Ms. Holmes took the stand in her protection, she tried to upend the narrative round her spectacular downfall, introducing bombshell allegations of abuse in opposition to Mr. Balwani. He denied the accusations, and textual content messages launched in the course of the trial depicted a relationship of roughly equals, particularly as the corporate got here underneath stress from whistle-blowers and the media.

“The entire thing that we now have to answer liars is ridiculous,” Ms. Holmes fumed in a single message. Mr. Balwani promised retaliation in opposition to their accusers: “We can even take authorized motion as soon as that is behind us.”

On the coronary heart of the federal government pursuit of each defendants is the argument that they stepped over the road from hype — as widespread in Silicon Valley as respiratory — into deceit.

Ms. Holmes might conjure up an alternate actuality with the easy ease of her position mannequin, the Apple co-founder Steve Jobs. Witnesses in her trial testified that she had made individuals consider she would change the world. Buyers poured practically $1 billion into Theranos.

Mr. Balwani, like most of lifeless humanity, possessed no such items. There is just one video of him on-line, however it’s revelatory of his type.

In March 2014, when Theranos was rolling out its finger-prick blood testing system in Walgreens in Arizona, Mr. Balwani gave a presentation on “Healthcare Innovation” to the Arizona Senate’s Well being and Human Providers Committee. He wasn’t initially presupposed to do it — Ms. Holmes needed to cancel — and didn’t appear like he was having fun with himself.

Mr. Balwani advised the legislators that the corporate was engaged on “one thing that we consider is magical.” He talked about one explicit affected person, who “had no limbs.” When this man needed to give blood, the needle went into his neck. On the Theranos clinic, nonetheless, “he had a small limb hooked up to his physique” and “we have been in a position to do a finger prick on him.”

How a limbless particular person all of a sudden gained a limb was not defined. It was nearly as if Mr. Balwani had dared the senators to level out that Theranos was actually magical pondering.

They didn’t. As a substitute, they saluted him.

“I really like bringing the free market to our well being care system,” mentioned State Senator Kelli Ward, a Republican, who famous that she was a household physician.

(Senator Ward is now the chair of the State Republican Occasion and was energetic in efforts to overturn native election leads to favor of President Trump. “It’s even clearer now that we have to permit the free market to work,” she mentioned in an e mail.)

Neither the prosecution nor the protection has filed its ultimate checklist of witnesses for Mr. Balwani’s trial. In December, the legal professionals filed their proposed questionnaires for potential jurors, together with a preliminary witness checklist.

A handful of potential witnesses from the Holmes trial have been struck for apparent causes, together with Ms. Holmes’s mom, Noel, and former Secretary of State Henry Kissinger, a Theranos board member. Mindy Mechanic, the Holmes workforce’s skilled witness on home abuse who in the end didn’t take the stand, was additionally eliminated. Mr. Balwani’s authorized workforce named consultants on forensic accounting, mental property and SQL databases.

One potential witness for the federal government would make headlines. Ms. Holmes is, nonetheless, exceedingly unlikely to testify, even when doing so may scale back her jail sentence.

“She appears more likely to battle this to the tip of the earth,” mentioned Jen Kennedy Park, a white-collar protection lawyer.


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