Jury takes fraud case against ex-partner of Elizabeth Holmes | business news

By MICHAEL LIEDTKE, AP Technology Writer

SAN JOSE, Calif. (AP) — The fate of tough tech executive Ramesh “Sunny” Balwani is now in the hands of a jury weighing criminal charges alleging he teamed up with disgraced Theranos CEO, Elizabeth Holmes, his former partner, in an elaborate fraud that rocked Silicon Valley.

US District Judge Edward Davila handed the case over to the jury Friday afternoon after federal prosecutors in San Jose, California wrapped up a rebuttal of more than 11 hours of closing arguments methodically presented by one of Balwani’s attorneys, Jeffrey Coopersmith.

The jury will pore over testimony, emails, obscene texts and other evidence presented during a three-month trial as it looks at 12 counts of fraud and conspiracy brought against Balwani for his role with Theranos, a blood-testing company founded by Holmes. when he was only 19 years old.

Balwani, 57, began dating Holmes, now 38, around the same time she dropped out of Stanford University in 2003 to found her startup. She helped Holmes behind the scenes until 2010, when she became COO of Theranos while living with Holmes. The couple split in 2016 when Theranos began to collapse amid revelations about serious problems with Theranos technology that they had hidden from investors and patients.

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A separate jury spent seven days deliberating evidence at Holmes’s trial before convicting her of four counts of investor fraud and conspiracy and acquitting her of four counts of patient fraud and conspiracy earlier this year. Dávila could sentence her to up to 20 years in prison at a hearing scheduled for late September. The jury at Balwani’s trial is aware of Holmes’s conviction, but was ordered not to consider that in deliberating her.

The case revolves around allegations that Holmes and Balwani misled investors and patients about a Theranos blood-testing technology that they boasted would revolutionize healthcare and generate huge profits.

But the blood tests never worked consistently as Holmes and Balwani had promised, even as prominent investors like Silicon Valley billionaire Larry Ellison and media mogul Rupert Murdoch poured nearly $1 billion into Theranos. Meanwhile, Theranos was testing its technology as part of a partnership with Walgreens that was giving patients inaccurate results that threatened to jeopardize their health.

By 2014, Holmes and Balwani’s Theranos holdings were worth a combined $5 billion. Holmes, who served as Theranos’ star attraction and chief visionary, owned $4.5 billion of that amount, with the rest belonging to Balwani, who oversaw the company’s day-to-day operations with a sometimes abrasive management style.

All that wealth evaporated once it became known that Theranos’ technology was not delivering on Holmes’ brazen promises. The crash transformed Theranos, and the couple who once ran it, from a Silicon Valley sensation to a cautionary tale about how things can horribly spiral out of control when ambitious entrepreneurs exaggerate the capabilities of a nascent technology.

Federal prosecutors provided evidence showing Balwani grossly overstated Theranos revenue projections that helped Holmes attract investors as he oversaw the company’s lab and covered up flawed testing of patients’ blood.

“The plan here was not to get caught,” US Attorney John Bostic told the jury Friday. “The plan was not for the company to fail. The plan was to get away with it.”

To underscore Balwani’s influential role, prosecutors used his closing arguments to highlight a July 2015 text he sent to Holmes. “I am responsible for everything at Theranos,” Balwani reminded Holmes. “They have all been my decisions as well.”

Balwani’s attorneys responded by describing him as a loyal soldier who not only pledged around $15 million of his own money to help prop up Theranos from 2009 to 2011, but also as a tireless worker focused on doing whatever he could to help Holmes. to achieve their goals. They also insisted that Balwani fell under the same spell Holmes cast as he courted investors and convinced powerful men such as former US Secretary of State George Schultz and former US Secretary of Defense James Mattis to join. Theranos board of directors.

Holmes “certainly has to be as charismatic a person as possible,” Coopersmith, Balwani’s attorney, told the jury at one point during a closing argument that unfolded over the course of three days this week.

In his rebuttal, Bostic argued that Holmes relied heavily on Balwani’s advice because he was older and more experienced than her, having previously sold a startup that made him rich.

“They were partners in every sense of the word,” Bostic said of Holmes and Balwani.

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