Elizabeth Holmes’ ex-boyfriend set to go to trial in Theranos case

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Elizabeth Holmes’ ex-boyfriend set to go to trial in Theranos case

Elizabeth Holmes was a star entrepreneur whose lawsuit for defrauding investors at a blood-testing start-up became one of the biggest Silicon Valley spectacles since the iPhone’s debut. His sentencing in January marked a rare moment in the arrogant history of technology: a chief executive was held criminally responsible for lying.

For much of her trial, Ms. Holmes tried to blame her deputy and ex-boyfriend, Ramesh Balwani, for being wrong at her company, Theranos. Now Mr. Balwani, better known as Sunny, will have the opportunity to answer in his own fraud trial. Jury selection was due to begin Wednesday in San Jose, Calif., in the same federal courtroom where Ms. Holmes’ fate was determined.

The first test offered, and the second test, promise, a closer examination of an unusual relationship between a young woman and an older man. Ms. Holmes and Mr. Balwani had a secret romance that was also a professional alliance, an exciting promise to improve health care for millions that instead put patients at risk. His blood tests didn’t work, even though he assumed that new and improved technology would save him from his reckless claims.

Mr. Balwani, 57, is a former software executive who made a fortune during the dot-com boom of the late 1990s. He befriended Ms. Holmes when she was studying in China the summer before her freshman year at Stanford University. Their romantic relationship eventually led him to join Theranos as President and Chief Operating Officer in 2009.

He was the opposite of a star who was barely mentioned in the glossy cover stories about Ms. Holmes and Theranos. However, by all evidence, Mr. Balwani and Ms. Holmes, now 38, were a team that firmly ruled the start-up. Very few people knew that they were in a relationship.

“She was the magician of Oz, dazzling investors and the media, but she was behind the scenes working on the machinery,” said Reed Kathryn, a San Francisco attorney, on behalf of investors on Ms. Holmes and Theranos in 2016. Succeeded successfully. He said he believed prosecutors would show that “he knew she was lying and they never stopped it.”

“He knew everything,” said Mr. Catherine.

Mr. Balwani’s case will proceed on familiar land. He faces the same 12 charges that Ms. Holmes initially faced. (One count was dropped after a procedural error by the government.) He has pleaded not guilty.

Ms. Holmes was found guilty of four counts of defrauding investors and acquitted on four counts of defrauding patients; The jury stalemate on the counts of the remaining three investors. He will be sentenced in the fall.

“Having the opportunity to run the government as a whole, they may have learned what worked and what didn’t,” said James Melendres, a former federal prosecutor representing corporate clients.

Prosecutors, Mr Balwani and his lawyers declined to comment. Through her lawyers, Ms Holmes declined to comment.

While Ms. Holmes’ background is widely documented, relatively little is known about Mr. Balwani, including why she is called Sunny.

A seasoned software executive, he was fortunate enough to have his start-up bought by a large firm just before the stock market crash of 2000, earning him nearly $40 million. They got divorced, went back to school to get an MBA and study computer science, and bought fancy cars. (His license plate, alluding to Karl Marx, was DASKPTL.) When he joined Theranos, he invested millions of his own money in it, his lawyers have said.

In Theranos, he had a reputation for being a rigid, demanding boss who became increasingly paranoid that employees would steal trade secrets that would revolutionize blood testing. In an incident narrated by journalist John Carrero, Mr Balwani called the police to pursue a late employee, explaining that the former worker “stole property in his mind.”

Mr Balwani’s lawyers are expected to emphasize his lack of experience in biomedical devices, which was at the heart of Theranos’ claims. Legal experts said she was unlikely to testify. Perhaps he will be less sympathetic to the witness’s stance than Ms. Holmes, a new mother who lived her youth and reached court holding hands with her mother and her partner.

“They don’t have those optics on their side,” said Ann Kim, a former federal prosecutor who represents companies undergoing government investigations.

When Ms. Holmes took the stand in her defence, she tried to advance the story around her spectacular downfall, introducing blatant allegations of misconduct against Mr. Balwani. He denied the allegations, and text messages released during the trial depicted a more or less equal relationship, especially as the company came under pressure from whistle-blowers and the media.

Ms. Holmes said angrily in a message: “The whole point of responding to lies is ridiculous.” Mr. Balwani promised retaliation against those making his allegations: “Once this is behind us, we will also take legal action.”

At the heart of the government’s pursuit of both defendants is the argument that they stepped over the line from propaganda — as common as breathing in Silicon Valley — into deceit.

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Ms. Holmes could conjure up an alternate reality with the sheer ease of her role model, Apple co-founder Steve Jobs. Witnesses at her trial testified that she had convinced people that she would change the world. Investors invested about $1 billion in Theranos.

Like most of the dreary humanity, Mr. Balwani had no such gift. There is only one video of him online, but it is going to reveal his style.

In March 2014, when Theranos was launching its finger-prick blood testing system at Walgreens in Arizona, Mr. Balwani made a presentation on “Healthcare Innovation” to the Arizona Senate’s Health and Human Services Committee. Basically he didn’t have to – Ms. Holmes had to cancel – and didn’t seem to be enjoying himself.

Mr Balwani told legislators that the company is “working on something that we believe to be magical.” He talked about a particular patient who “had no organs.” When this man was to be given blood, the needle went into his throat. At Theranos Clinic, however, “he had a small organ attached to his body” and “we were able to prick a finger on it.”

How a limbless person suddenly acquired a limb is not explained. It was almost as if Mr. Balvani had dared to tell the senators that Theranos was truly magical.

they did not. Instead, they saluted him.

“I like to bring the free market to our health care system,” said State Senator Kelly Ward, a Republican who said she was a family doctor.

(Senator Ward is now president of the State Republican Party and was active in efforts to reverse local election results in favor of President Trump. “It’s even more clear now that we need to allow the free market to work,” she said. Said in an email.)

Neither the prosecution nor the defense have filed their final list of witnesses for the trial of Mr. Balwani. In December, lawyers filed their proposed questionnaire for potential jurors, including a preliminary witness list.

Some potential witnesses to the Holmes trial were killed for obvious reasons, including Holmes’ mother, Noel, and former Secretary of State Henry Kissinger, a Theranos board member. Mindy Mechanic, the Holmes team’s expert witness on domestic abuse, who ultimately did not take a stand, was also fired. Mr. Balwani’s legal team nominated experts in forensic accounting, intellectual property and SQL databases.

A potential witness for the government will make headlines. However, Ms. Holmes is far less likely to testify, even though doing so could reduce her prison sentence.

“It looks like she’s likely to fight this to the end of the earth,” said Jane Kennedy Park, a white-collar defense attorney.

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