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Elizabeth Holmes' co-defendant could soon face a verdict in Theranos trial

·Reporter
·4 min read

The fate of Ramesh "Sunny" Balwani, once a high-flying Silicon Valley executive, is now in the hands of a jury, pushing the infamous biotech startup Theranos' story closer to a finale.

Lawyers for Ramesh “Sunny” Balwani, the former president and chief operating officer of Theranos, rested their defense case on Friday, following 11 hours of closing arguments in the San Jose criminal fraud trial.

Balwani, 57, faces a dozen wire fraud and conspiracy charges tied to his role as an executive in Theranos, which imploded after it became clear that its blood-testing technology did not work as advertised.

During his 13-week trial, Balwani's defense portrayed him as a subordinate of Theranos founder Elizabeth Holmes, who was found guilty in January of defrauding investors. His lawyers contended he sincerely believed in Theranos' technology, which promised to process hundreds of diagnostic tests with a finger prick of blood.

“Over and over again, the government decided not to show you the whole story,” Balwani's attorney, Jeffrey Coopersmith, told jurors, according to The Wall Street Journal, countering the government's claims that he and Holmes were equally culpable for the alleged fraud.

SAN JOSE, CALIFORNIA - MARCH 15: Former Theranos COO Ramesh
Former Theranos COO Ramesh "Sunny" Balwani arrives at the Robert F. Peckham U.S. Federal Court on March 15, 2022 in San Jose, California. (Photo by Justin Sullivan/Getty Images)

Theranos raised nearly $1 billion from investors before collapsing in the wake of a bombshell 2015 Wall Street Journal report revealing it was not, in fact, conducting the array of blood tests from a finger prick of blood. The case has become an extreme example of what happens when Silicon Valley investors pile into a startup that has yet to prove its technology works.

[Watch: 'Valley of Hype': The culture that built Elizabeth Holmes]

Prosecutors say Balwani and Homes defrauded investors and customers through misrepresentations about the capability and reliability of those tests, omitting the fact that Theranos used third-party devices rather than its proprietary equipment to test blood samples.

In January, a separate jury that weighed nearly identical charges against Holmes returned guilty verdicts on three counts of criminal wire fraud and one count of conspiracy to commit wire fraud against investors. Balwani’s trial took place in the same San Jose, California courtroom where Holmes stood trial.

Holmes, now 38, founded the Silicon Valley startup in 2003 at just 19 years old, with a vision to overhaul diagnostic health care. Balwani joined the blood-testing venture about six years later. For nearly a decade, he and Holmes sold investors on the idea of developing an analyzer, the size of a desktop printer, that could run a suite of common tests on as little as a drop or two of blood taken from a patient's finger.

Theranos founder Elizabeth Holmes (center) arrives to attend her fraud trial at federal court in San Jose, California, U.S. January 3, 2022.  REUTERS/Brittany Hosea-Small
Theranos founder Elizabeth Holmes (center) arrives to attend her fraud trial at federal court in San Jose, California, U.S. January 3, 2022. REUTERS/Brittany Hosea-Small

Prosecutors alleged that the pair, who were romantically involved, later used the company to defraud patients who paid for unreliable Theranos tests. Following their joint indictment in 2018, their trials were severed when Holmes raised allegations of abuse against Balwani. Balwani has repeatedly denied those claims.

Balwani’s counsel framed the former COO’s role at Theranos as distinct from Holmes.’ In opening arguments, his lawyers told the jury Balwani was a subordinate who joined years after Holmes established the company.

Prosecutors, on the other hand, described Balwani as Holmes' partner in crime, showing jurors Balwani's 2015 text message to Holmes saying: “I am responsible for everything at Theranos. All have been my decisions too,” the Wall Street Journal reported.

Balwani, who made millions as an executive during the dot-com boom, started dating Holmes soon after she dropped out of Stanford University at the age of 19. Holmes testified in her own defense, describing Balwani, 19 years her senior, as a physically and mentally abusive romantic partner whose controlling demands behind the scenes impacted her decisions.

Judge Edward Davila, who presided over Holmes’ and Balwani's trials, postponed her sentencing until Balwani’s trial concluded. Her sentencing is currently scheduled to take place in September.

Each of Balwani’s charges carries a maximum penalty of 20 years in prison.

Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.

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