SAN JOSE, Calif. (KRON) — Ramesh “Sunny” Balwani’s defense attorney did not hold back in opening statements as he pivoted blame for what went wrong at Theranos away from his client and directly at Elizabeth Holmes.
Defense Attorney Stephen Cazares told the jury, “Sunny did not start Theranos, he did not control Theranos, he did not have final decision making authorities.”
Holmes founded her blood testing company in Palo Alto in 2003, assembled an illustrious board of directors, and forged partnerships with pharmaceutical companies, all before Balwani joined the company in 2009 as COO, according to the defense.
“Sunny never made a dime from Theranos. Sunny committed no crime, no fraud, and never intended to deceive or cheat anybody. Not investors, and not patients,” Cazares said.
Just two months ago, a federal jury convicted Holmes on four counts of defrauding Theranos investors and acquitted her on counts relating to patients.
Now it is Balwani’s turn to defend himself in the same courtroom with a different jury. The former co-defendants’ fraud trials were split into two separate trials.
During jury selection, prospective jurors were eliminated if they knew too much about Holmes’ high-profile fraud trial or that Holmes accused Balwani of abuse.
Cazares told the jury, “The headlines and sensational news stories about Theranos and Elizabeth Holmes have no place in this trial.”
For her trial, Holmes testified that Balwani controlled her entire life, abused her, and manipulated her. She said Balwani would get very angry with her, constantly criticized her, and told her, “If you follow your instincts, you will fail.”
The Theranos CEO had a secret romantic relationship with her COO and the two lived together in a mansion in Atherton.
Prosecutors say Holmes, 37, and Balwani were co-conspirators who told each other everything.
“They ran the company together. They were partners in everything, including their crimes,” Assistant U.S. Attorney Robert Leach said in opening statements.
Leach said Balwani became Theranos’ COO and president despite the fact that he had no medical degrees, experience in blood testing, building medical devices, or running a lab.
“What he did have was a connection to Holmes … his romantic partner,” Leach said.
Cazares counter-argued, “Balwani did not join Theranos because Elizabeth Holmes was his girlfriend.”
Balwani joined because he believed in the biotech company’s technology and mission to revolutionize blood testing, according to the defense.
Balwani, 57, was already a successful and wealthy Silicon Valley businessman before he met Holmes. They met while studying abroad in China. At the time, Holmes was a Stanford University freshman and 18 years old. She is 20 years younger than Balwani.
They re-connected back on Stanford’s campus in 2003 and moved in together.
Balwani invested $5 million of his own wealth into Theranos when he was hired in 2009. Cazares said his investment shows he really did believe Theranos could deliver on its promises.
Prosecutors said Holmes and Balwani resorted to fraud starting in 2013 when they were faced with failure. Their company was in danger of going broke.
“In the end, this is a case about fraud, about lying, and deceiving to get money,” Leach told the jury.
They claimed Theranos invented a mini blood testing machine “that could run any blood test from a drop of blood from the finger,” Leach said. “He and Holmes began making grandiose, spectacular claims about Theranos capabilities and accomplishments.”
Between 2013 – 2015, the lies were “enormously successful. They raised hundreds of millions of dollars from investors. It made Holmes and Balwani billionaires,” Leach said.
Holmes’ face graced the cover of Fortune magazine for an article that proclaimed her America’s youngest self-made billionaire.
Balwani owned Theranos shares that equated to half a billion dollars, prosecutors said. Holmes owned even more shares, valued at $4.5 billion.
“The scheme brought them fame, adoration, and comparison to companies like Microsoft and other unicorn technology companies,” Leach said.
Holmes fired Balwani in 2016 after state and federal investigators shutdown Theranos’ blood lab. Holmes testified that Balwani continued to follow her outside of work, at times showing up at her church and on her favorite Palo Alto running trail.
Balwani’s trial will resume Wednesday with more testimony from the trial’s first witness, whistleblower and former Theranos lab tech Erika Cheung.
Cheung wrote letters to state regulators detailing major problems she witnessed in the blood lab. Cheung said she was “terrified,” but she sent her letter to state regulators anyway, because she knew what was happening at Theranos was wrong.