Holmes, who has been the subject of multiple books, podcasts, a documentary and recently a Hulu series, was convicted on four counts of misleading investors in early January this year. The convictions carry possible sentences of fines and prison time, and she is expected to be sentenced in September.
Theranos was a highflying biotech start-up founded in 2003 that eventually purported to be able to run hundreds of tests from just a few drops of blood drawn from a patient’s fingertip. The company attracted hundreds of millions of dollars in investment, including from high-profile figures like the prominent Walton family of Walmart fame, media mogul Rupert Murdoch, Mexican businessman Carlos Slim and Oracle co-founder Larry Ellison.
Theranos’s board members included former secretaries of state Henry Kissinger and George Shultz and former secretary of defense Jim Mattis. Investors and the media seemed captivated by the young CEO — Holmes started the company when she was just 19 — and her desire to make medical testing cheaper and less painful.
But the company ultimately crumbled in 2018 after years of scrutiny from media and federal regulators. Theranos’s technology could not run nearly as many tests as suggested and results were plagued with inaccuracies. Holmes was charged with massive fraud by the Securities and Exchange Commission and later the government leveled the criminal charges against her and Balwani.
The pair had their cases separated from each other after Holmes alleged in court documents that Balwani had abused her during their romantic relationship. He has denied the claims.
Balwani, like Holmes, has pleaded not guilty. His trial has mirrored hers in many ways, including calling several of the same witnesses who testified about the company’s lab conditions and their investments in the firm.
During closing arguments on Tuesday, Balwani’s lawyer Jeffrey Coopersmith told jurors that the former executive believed in Theranos’s technology and promise, and was doing the best with the information he had at the time. (Pieces of his defense were similar to that of Holmes, who defended herself by saying she had acted in good faith.)
“He believed, and had every reason to believe, in the world-class scientific team at Theranos and the technology they developed,” Coopersmith said.
Coopersmith also told jurors that the government left out details about Balwani’s time at Theranos and “chose not to tell you the whole story.” His closing argument is expected to continue Wednesday.
Prosecutor Jeff Schenk told jurors that Balwani acted with Holmes to mislead investors and patients, allegedly leading them to believe that Theranos’s technology was more accurate and the company was more successful than it really was. Schenk told the jury that Balwani controlled many parts of the business.
“I am responsible for everything at Theranos,” Balwani wrote in a 2015 text message to Holmes that Schenk showed jurors. “All have been my decisions too.”
Balwani helped manage the company’s doomed relationship with drugstore chain Walgreens, and prosecutors have said that the former executive sent some investors binders that included allegedly misleading statements, including one that said “Theranos offer tests with the highest levels of accuracy.” In reality, Theranos could only run about a dozen tests on its own machine, previous testimony has revealed, and many former employees questioned the accuracy of the technology.
“Mr. Balwani knew that Theranos was not generating, and would not generate, any meaningful revenue by being honest with people,” Schenk said. “So he chose a different path.”
Unlike Holmes, Balwani did not testify in his own defense. His legal team called only two witnesses — a physician who used Theranos’s services, and a technology expert who testified about an electronic database that held Theranos test results but that the government was not able to access.
Holmes testified on the stand for more than 20 hours in November and December, drawing a large crowd to the small federal courtroom each day as international media and interested members of the public traveled to hear her speak in her own defense.
The trial, which has suffered coronavirus-related delays, could be in the jury’s hands as soon as this week.
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