The Sunny Balwani trial: 3 times guiltier than Elizabeth Holmes

The Sunny Balwani trial: 3 times guiltier than Elizabeth Holmes

There was something more than a bit unsatisfying about the split-decision verdict last January in the trial of Elizabeth Holmes. Sure, she was convicted in federal court on four fraud-related counts, each related to bilking investors. And yes, she likely faces considerable jail time when she is sentenced this fall. But jurors also acquitted her on four counts related to defrauding doctors and patients. And they couldn’t agree on three charges that she swindled venture capitalists who invested early on in Theranos, the failed blood testing company Holmes founded as a teenager.

In contrast, the verdict on Thursday was downright resounding for Ramesh “Sunny” Balwani, her co-conspirator, ex-boyfriend, and former president of Theranos: guilty on all 12 counts. The jury needed only five days — considerably less time than the Holmes jury — to reach their unanimous finding.

To be fair, Balwani was doomed almost from the moment Holmes was convicted, if not sooner.

A scowling, nasty-by-reputation figure in contrast to the cheerful new-mom and loving daughter vibe Holmes exuded at trial, Balwani was considerably less sympathetic by any measure. Jurors needn’t have been familiar with the portrayal of a venal Balwani in the


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series “The Dropout,” one that positioned him against the deer-in-the-headlights quality of Holmes as played by Amanda Seyfried. That’s because they repeatedly heard first-hand accounts of Balwani himself, placing him directly at the center of the fraud and deception in the real-life rise and fall of Theranos.

By their own accounts, Holmes and Balwani ran the company jointly for years. But Holmes, a college dropout, paid particular attention to marketing and finance, while Balwani, a former software executive, oversaw the troubled clinical operations of the startup. This, at least, was the argument Holmes made in court that got her off on the patient-related charges — and presumably why the Balwani jurors had an easier time pronouncing him guilty. “They must have taken his job as the head of the lab very seriously,” notes Ellen Kreitzberg, a professor of law at Santa Clara University, who I saw frequently when we attended the Holmes trial.

Balwani also suffered from being tried after Holmes. The two were jointly indicted in 2018, but Judge Edward Davila eventually split their trials, declaring that Holmes would go first. That trial, conducted from September and December last year, gave prosecutors an opportunity to see exactly what worked and what didn’t. They were like actors who, having honed their material in summer stock, went on to present the fine-tuned version on Broadway. The government fielded the exact same trial team against Balwani — who faced the exact same charges — and called many of the exact same witnesses.

The bright-lights analogy only goes so far: The Holmes trial was a media circus from beginning to end, complete with cosplaying Holmes fans and journalists camped out on sidewalks in the middle of the night to ensure snagging one of 34 public seats in the courtroom. The Balwani proceeding, though equally long, was a lightly attended affair, with minimal press coverage and no theatrics.

One witness the Balwani jury did not hear from was Holmes. At her own trial, she took the stand in her defense, offering tearful testimony about how Balwani had coerced and even abused her ­— the so-called Svengali defense. After her conviction, there was speculation that she would testify against Balwani in order to win favorable treatment at her sentencing. She did not. Nor did Balwani testify in his own defense

Another factor going against Balwani was the extremely hands-on nature of his role at Theranos. As recounted at her trial, Holmes literally flitted in and out of key scenes in the drama. The hedge fund investor Brian Grossman, for example, told of meeting Holmes fleetingly in initial due-diligence meetings, before following up in greater depth with Balwani. Holmes was found guilty on the charge related to Grossman’s investment. Convicting Balwani on the same count was a slam dunk.

Balwani’s legal team played an exceedingly weak hand as best they could; their closing argument dragged on for three days. In an effort to persuade jurors what they should not consider in reaching their verdict, Balwani’s lead lawyer, Jeffrey Coopersmith nevertheless reminded them of his client’s misdeeds. “This is not a case about violations of regulations,” he said, noting that Theranos had been found to have violated various federal rules governing clinical labs. “Those are important. But that’s not what we are doing here. This is about intent to deceive, intent to take patient’s money through deception, knowingly running a lab that was giving patients inaccurate results, and trying to take their money through that process.” The government couldn’t have said it better. Inadvertently or not, Coopersmith neatly painted a precise roadmap that pointed to Balwani’s guilt.

Balwani’s conviction also represents a save for the government, which at tremendous expense and effort succeeded only at convicting Holmes for defrauding a few wealthy investors, including the family of Betsy DeVos, who served as education secretary in the Trump administration. But they weren’t able to get her prison time for the Theranos patients who received false blood-test results, or for the doctors who believed the company was able to diagnose illnesses from a single prick of a patient’s finger, rather than drawing samples the old-fashioned way, with a needle in the arm. Running the table against Balwani provides a form of redemption — and a strong signal to tech executives in Silicon Valley, who routinely overhype their products to land clients and investors.

Judge Davila set a November 15 date for Balwani to be sentenced. That means he and Holmes needn’t ever cross paths in what remains of their unhappy journey through the criminal justice system. Her sentencing is set for September 26. That happens to the first day of the Jewish holiday Rosh Hashanah. Should the judge postpone the hearing to accommodate any worshipful party to the case, that would mean at least one more delay in a process that has dragged on for years — but now, at long last, is finally nearing an end.


Adam Lashinsky is a Business Insider contributor and former executive editor at Fortune magazine.

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