Two months after Elizabeth Holmes was found guilty of defrauding Theranos investors, her former business and romantic partner, Ramesh “Sunny” Balwani, began his own trial on Wednesday.
The trial of Balwani, who served as the blood testing startup’s co-president, shares several parallels with Holmes’s. The businessman is accused of similar crimes, including wire fraud and conspiracy to defraud investors, and will appear in the same San Jose, California, courthouse where Holmes spent more than 12 weeks defending herself.
Jury selection began on Wednesday, with opening arguments expected to start on Tuesday of next week.
Balwani’s case marks the latest chapter in a cautionary tale that has inspired films, podcasts and a television show, and prompted a reckoning with the Silicon Valley hype machine.
Both trials centered on the spectacular rise and fall of Theranos, the company Holmes founded after dropping out of Stanford at 19 years old that promised a revolutionary blood testing technology, attracting millions of dollars in investments.
But in 2015, the Wall Street Journal reported that the company fell short of this ambitious pledge, revealing that its tests were largely inaccurate and that it was running most labs on third-party machines with traditional blood drawing techniques.
A jury convicted Holmes in early January of four counts related to wire fraud against investors, and remains free on bond pending her sentencing hearing on 26 September 2022, after Balwani’s trial concludes.
Balwani, 56, is being charged separately for his own role in Theranos, where he served in varying capacities including co-president and a member of the board from 2009 to 2016. He has pleaded not guilty.
While guilty verdict in the Holmes trial does not have any direct legal bearing on Balwani’s charges, experts say having a second opportunity to argue a Theranos case could give the prosecution an advantage.
“It does permit prosecutors to better understand what worked in that trial and what didn’t,” said Michael Weinstein, a former Department of Justice trial attorney and current white collar defense attorney at law firm Cole Schotz.
Balwani rose as a prominent figure during Holmes’s own fraud trial, where the founder testified extensively about their relationship. The pair met when he was 37 and she was an 18-year-old high school student. In her own trial she accused him of controlling behavior, which she argued ultimately led to her business decisions that resulted in the fraud charges.
Prosecutors, however, sought to prove Holmes acted alone and had the final say in Theranos’s missteps. “She chose to be dishonest with investors and patients,” prosecutor Jeff Schenk said in his closing arguments. “That choice was not only callous, it was criminal.”
The domestic violence defense was ultimately less prominent than initially anticipated, Weinstein said, raising the question of whether Balwani’s legal team will address the abuse allegations in court. He has previously denied the accusations.
Balwani’s trial is almost certain to generate less spectacle than Holmes’s, which was marked by fervent media coverage and long lines of observers waiting for a coveted courtroom seat. But his case could still have wide-ranging impacts on Silicon Valley and investing-related regulations, said Weinstein, as federal prosecutors seek to prove the Holmes verdict was not a fluke.
“It’s the legal equivalent of the famous Bat signal shining brightly into the sky but here, it’s the prosecution shining a light into Silicon Valley puffery, misleading public facing statements and false investor disclosures,” he said.
“When and if those occur, government wants Silicon Valley to know there is a new sheriff in town in determining whether startups actions cross the line between enthusiasm or intentional fraud,” Weinstein added.
