Theranos Saga Returns To Courtroom As Ex-COO Balwani Is Tried

Sunny Balwani, former president and chief operating officer of Theranos Inc., leaves federal court in San Jose, California, October 2, 2019.

Michael Kort | Bloomberg | Getty Images

He was the man behind the lab curtain at blood test start-up Theranos. Now he is at the center of his own criminal fraud case.

Opening arguments in the trial of Ramesh “Sunny” Balwani, former president and chief operating officer of Theranos, begin Wednesday at the San Jose federal courthouse, where a jury in January found Theranos ex-CEO Elizabeth Holmes guilty of four counts of wire fraud and conspiracy to commit wire fraud.

A jury of six men and six women will decide the fate of Balwani, who has been charged with the same crimes as Holmes. Each carries a maximum prison sentence of 20 years. He pleaded not guilty.

While Holmes awaits her sentencing in September, she could again act as a key witness against Balwani. In addition to serving as the No. 2 executive of Theranos, Balwani was Holmes’s friend.

At her trial, Holmes accused Balwani of a pattern of sexual and psychological abuse that “affected everything about who I was,” she told the jury. Balwani has denied the allegations.

Reed Kathrein, a lawyer who represented some investors in a lawsuit against Holmes and Theranos, told Slice Mag that Balwani was at the center of the Theranos ploy, lying about the company’s technology and taunting shareholders for hundreds of millions of dollars.

“Sunny arranged everything, knew everything,” says Kathrein, who is not involved in Balwani’s criminal fraud case. “While he may not be the public face and may not have made the statements, he was fully complicit in getting the money from investors and patients.”

The widespread publicity surrounding Holmes’ case delayed the opening of the arguments as Judge Edward Davila and lawyers for both sides struggled to find a complete list of impartial jurors. It took four days and the interrogation of nearly 100 candidates to fill the 12-member jury.

During the jury selection, more than half of the potential jurors raised their hands when the attorneys asked if they’d heard of Holmes or Theranos. Several said they were aware of Holmes’ abuse claims against Balwani.

Prosecutors have not said whether they plan to recall Holmes after she served as a key witness in her own trial. Kathrein said Holmes could testify against Balwani in an effort to reduce her prison sentence.

“Elizabeth has already indicated that she wants to throw him under the bus,” Kathrein said. “She did it when he left Theranos. She did it again during her own trial. I wouldn’t be surprised if she throws him under the bus one more time and testifies to save herself from a harsh sentence.’

Balwani .’s lawyerJeffrey Kuipersmit, declined to comment. Holmes’ attorneys have not responded to Slice Mag’s request for comment.

Theranos founder Elizabeth Holmes, center, and her family leave the Robert F. Peckham Federal Building and U.S. Courthouse after a jury found her guilty on Monday, January 3, 2022, on four counts in San Jose, California.

Dai Sugano | MediaNews Group | Getty Images

Balwani, a former software executive who made millions during the dotcom boom, met Holmes in Beijing in 2002, where they were both studying Mandarin. It was the summer before Holmes’ freshman year at Stanford University. She was 18, he 37.

Holmes started Theranos the following year and soon dropped out of Stanford. In 2005, she and Balwani moved in together in Palo Alto, California. However, their 12-year romance was largely kept a secret from investors, business partners and employees.

Balwani’s involvement with Theranos began in 2009. The company was struggling financially and Balwani stepped in by providing a $13 million loan. Six months later, he was president and COO.

According to Holmes, Balwani was her mentor and advised her on how to run a business. In her testimony, she said she understood Balwani as a successful businessman and that he worked for Microsoft co-founder Bill Gates.

At the most dramatic moment of her four-month trial, Holmes described Balwani’s controlling behavior. She told the jury that Balwani dictated everything from her schedule to her diet. However, she stopped blaming Balwani for all the accidents, saying he never told her what to say to investors or pharmacy partners like Walgreens.

“He was not who I thought he was,” Holmes told the jury. “And I realized that if I wanted to solve the problems and show the company its potential, I had to do it without him in the company.”

Holmes said she left the Silicon Valley home they shared in 2016 after a regulator inspection revealed major problems at the Theranos lab. Balwani left Theranos later that year.


In March 2018, the Securities and Exchange Commission accused Balwani and Holmes of “mass fraud”. While Holmes agreed to settle the SEC’s charges without admitting or denying the charges, Balwani dismissed the settlement and is fighting the charges separately from his criminal trial.

Danny Cevallos, a lawyer and legal analyst for NBC News, said Balwani is at a disadvantage because Holmes has already been convicted. Text messages received by Slice Mag during the Holmes trial show that both Balwani and Holmes were involved in the day-to-day operations of the company.

The government “invented what worked and what didn’t work with Holmes,” Cevallos said. That makes “this case even more airtight,” he added.

Barbara McQuade, a former US attorney, agrees that Balwani has great opportunities.

“The defense usually has more advantages when they’re in a case a second time,” said McQuade, who is also a legal analyst at NBC. “Witnesses almost always make minor inconsistencies in their testimony. A good attorney will recognize and point out those inconsistencies to show that the witness’s memory is fallible.”

But prosecutors may prefer not to call Holmes, McQuade said, because “she’s a known fraudster and good at fraud.”

Cevallos also sees the reason to keep Holmes off the stands.

“The government knows firsthand what a persuasive person Elizabeth is,” Cevallos said. “It’s essentially what they’ve sued her for. They’ve already won a case without her, and they probably don’t want her to come off any lighter than Balwani.’