However on Tuesday, in closing arguments to Mr. Balwani’s jury, prosecutors tied him on to Ms. Holmes and the yearslong fraud at Theranos. Jeffrey Schenk, an assistant U.S. legal professional and a lead prosecutor within the case, displayed a textual content message that Mr. Balwani had despatched Ms. Holmes in 2015 and that had been used as proof within the trial.
“I’m liable for every thing at Theranos,” Mr. Balwani wrote. “All have been my choices too.”
The textual content was an act of contrition, Mr. Schenk mentioned, including, “He is acknowledging his position within the fraud.”
The presentation capped greater than three months of testimony in Mr. Balwani’s trial, which largely mirrored Ms. Holmes’s final fall. She and Mr. Balwani, 57, was charged in 2018 with exaggerating the skills of Theranos’s blood-testing machines and enterprise efficiency when, in reality, the merchandise didn’t work and its enterprise was struggling. The pair pleaded not responsible. Ms. Holmes was convicted on 4 of 11 costs.
The trial for Mr. Balwani, who is called Sunny, lacked the fanfare of Ms. Holmes’s case. It nonetheless serves as a coda to a waning period of start-up development that usually relied on hype and hyperbole. Ms. Holmes and Mr. Balwani are among the many few tech executives who’ve ever been prosecuted on fraud costs.
Simply as Ms. Holmes tried blaming the deceptions at Theranos on others, Mr. Balwani has pointed the finger again at her. All through the trial, his attorneys argued that lots of Theranos’s blood assessments had labored. They mentioned Ms. Holmes, not Mr. Balwani, had managed Theranos. And on Tuesday, they painted Mr. Balwani as a real believer within the imaginative and prescient and know-how of Theranos.
Mr. Balwani “put his coronary heart and soul into Theranos,” mentioned Jeffrey Coopersmith, who represents him. “He labored tirelessly, 12 months after 12 months, to make the corporate a hit.”
Ms. Holmes, now 38, met Mr. Balwani when she was 18. They started relationship years later, after Ms. Holmes had based Theranos. Mr. Balwani joined Theranos in 2009, grew to become its chief working officer, and ultimately invested $ 4.6 million within the firm and took cost of its lab. The pair stored their relationship a secret and lived collectively in an expansive dwelling they co-owned in Atherton, Calif.
In 2016, after Theranos got here below hearth for mendacity about his blood testing talents, Mr. Balwani left the corporate and break up with Ms. Holmes. The pair have been charged with fraud collectively, however Ms. Holmes argued in filings to sever the instances and accused Mr. Balwani of emotional and sexual abuse. Her trial included dramatic testimony recounting the accusations. That topic was excluded from Mr. Balwani’s trial.
To convict Mr. Balwani, prosecutors should persuade the jurors that he deliberately lied to traders and sufferers about Theranos’s blood assessments and enterprise dealings.
Prosecutors tried placing the blame on Mr. Balwani for monetary projections that Theranos confirmed to traders and the situation of its labs. New witnesses included traders and executives who dealt instantly with Mr. Balwani, reasonably than Ms. Holmes.
One projection, introduced to traders in October 2014, confirmed Theranos would herald $ 140 million that 12 months. In actuality, income was $ 150,000. The following 12 months, Mr. Balwani projected almost $ 1 billion in income in pitches to traders. Theranos’s inner projections have been a lot decrease, proof confirmed, and the fact was $ 429,210.
Mr. Schenk mentioned Theranos’s leaders had directed its scientists to validate blood assessments and start providing assessments to the general public solely when it wanted cash from traders or prospects. “Not when the science was prepared,” he mentioned.
A brand new witness, Patrick Mendenhall, who dealt instantly with Mr. Balwani whereas investing in Theranos, outlined the guarantees that turned out to be deceptive or false.
Brian Grossman, an investor on the hedge fund PFM Well being Sciences, who was additionally a witness in Ms. Holmes’s trial, testified that Mr. Balwani had supplied his staff with monetary projections that far overstated Theranos’s projected income.
“When Mr. Balwani communicates with an investor, it’s for a goal, and the aim is to deceive them to get cash, ”Mr. Schenk mentioned.
Prosecutors additionally emphasised Mr. Balwani’s position in operating Theranos’s lab, which the manager referred to as a “catastrophe zone” in a 2014 textual content message. Mr. Balwani would additionally “take away dissent” by intimidating or pushing out workers who expressed concern about Theranos assessments, like Dr. Adam Rosendorff, a former lab director who testified in each trials, Mr. Schenk mentioned.
Mr. Coopersmith, the protection lawyer, mentioned that the federal government had painted a “extremely deceptive” image of Mr. Balwani’s time at Theranos and that it was unfair to indicate out-of-context non-public texts as proof of a conspiracy.
The messages didn’t present Mr. Balwani telling anybody to commit fraud, Mr. Coopersmith mentioned. “If there was a conspiracy, you’d suppose there could be every kind of conspiratorial, sinister conversations, and there simply is not,” he mentioned.
Notably absent from the witness stand have been James Mattis, a former protection secretary and Theranos board member, and Ms. Holmes, who had each testified in Ms. Holmes’s trial. Mr. Balwani didn’t testify in his protection.
If he’s convicted, Mr. Balwani and Ms. Holmes can be sentenced collectively in September.
Erin Woo contributed reporting.