Fraud trial against Elizabeth Holmes partner at Theranos draws to a close

SAN JOSE, California. — In a sharply worded closing argument, prosecutors on Tuesday said former Theranos COO Ramesh “Sunny” Balwani “was not a victim, he was the perpetrator of fraud” in the company’s collapse, while his lawyer criticized the government’s lawsuit, calling it inconsistent.

The closing statements ended a three-month lawsuit in which the government alleged that Balwani was acting with his ex-girlfriend and business partner, Theranos founder Elizabeth Holmes, in a multi-million dollar scheme to defraud investors and patients.

“Mr. Balwani had a choice,” said Assistant U.S. Attorney Jeffrey Schenk. “He could have watched Theranos collapse, he could have watched his girlfriend’s business collapse, or he could have done it differently. Balwani knew at the time that Theranos didn’t make money and wouldn’t make any profit by being honest with people.”

In his four-hour closing speech, Schenk ruthlessly criticized Balwani’s authority in Theranos and linked him to several parts of the business.

“Together with Elizabeth Holmes, they came up with two schemes,” Schenk said. “Two plans to deceive these groups of people. They decided to scam the investors in Theranos and they decided to scam the patients. And it is because of the decisions that Mr. Balwani made that we have been together since March.”

Balwani, 56, faces 10 counts of wire fraud and two counts of conspiracy to commit wire fraud. He, like Holmes, pleaded not guilty. Balwani joined Theranos in 2009 when the company was struggling financially. He stepped in with a $13 million loan.

Six months later, Balwani became chief operating officer and president of Theranos and eventually took over the lab. Holmes and Balwani went to great lengths to keep their romance a secret from employees, investors, and business associates.

At one point, Balwani’s stake was worth $500 million, his lawyers say, and the former software executive never sold a single stake. His personal and professional relationship with Holmes ended in 2016 as Theranos began to fall apart.

During the closing debate, Schenk walked the jurors through all 24 government witnesses, summarizing their testimony and showing their photographs on a monitor in the courtroom.

The government’s case against Balwani was very similar to that against Holmes, who was convicted in January four counts of fraud and conspiracy to commit wire fraud against investors. Bye Holmes awaiting sentencing in September, her lawyers filed a motion asking the judge to reverse the conviction and acquit her.

Unlike Holmes, Balwani did not testify in his defense. Balwani’s lawyers made the case much shorter, calling two witnesses: an Arizona doctor who used Theranos blood analyzers and an IT consultant who testified about a missing database containing patient test results.

Schenck reminded jurors that Balwani told investors Theranos would generate $1 billion in revenue by 2015 from a deal with walgreens.

“He knows he tricked Walgreens into doing business,” Schenk said. “And it’s only a matter of time before this house of cards collapses.”

The drugstore chain has been a key partner for Theranos, deploying wellness centers across 40 of its Arizona stores. “The relationship with Walgreens has been helpful in attracting investors,” Schenk said. Walgreens ended its partnership with the startup in 2016.

Prosecutors allege that Balwani is responsible for the high financial projections investors were counting on. Schenk said that when investors questioned Theranos claims, Balwani often assured them that the technology worked.

“Because what is fatal to fraud?” Schenck asked the jury. “Truth.”

The defense, which began its final performance late Tuesday night, tried to find loopholes. “The government decided not to show you the whole story because it didn’t fit with the version they wanted to tell,” said Balwani attorney Jeffrey Coopersmith.

Coopersmith passed through a stellar group of influential board members and investors that Holmes brought in.

“She was brilliant and charismatic – she had to be,” Coopersmith said. “Mr Balwani would have seen in Elizabeth Holmes the same thing as those people. And you wonder why he was attracted to Theranos, why he was attracted to Miss Holmes.”

Coopersmith told jurors Balwani that he had “put his heart and soul into Theranos, he worked tirelessly year after year to make the company a success”, later adding, “The government has not proven that Mr. Balwani tried to cheat or deceive anyone.”

Federal prosecutors will have the final say in their rebuttal. The jury is expected to begin deliberations this week.

“Mr Balwani wants you to think he’s a victim,” Shank said. “That he had options but never exercised them, so he left the money on the table. He also wants you to think that he wasn’t high enough in the organization to have meaningful conversations with investors and patients. truth. “