For months, Ramesh Balwani’s lawyers have tried to distinguish him from Elizabeth Holmes, his ex-girlfriend and business partner at blood-testing company Theranos.
Mrs. Holmes was found guilty of defrauding the start-up’s investors in January. Mr. Balwani is seeking a different outcome in his own fraud trial.
But on Tuesday, in closing arguments to Balwani’s jury, prosecutors linked him directly to Holmes and the years-old Theranos fraud. Jeffrey Schenk, assistant US attorney and lead prosecutor in the case, displayed a text message that Balwani had sent Holmes in 2015 that had been used as evidence in the trial.
“I am responsible for everything at Theranos,” wrote Balwani. “They were all my decisions too.”
The text was an admission of guilt, Schenk said, adding: “He is acknowledging his role in the fraud.”
The presentation wrapped up more than three months of testimony at Balwani’s trial, which largely mirrored Holmes’ last fall. She and Balwani, 57, were accused in 2018 of exaggerating the abilities of Theranos’ blood-testing machines and business performance when, in fact, the products didn’t work and their business was struggling. The pair pleaded not guilty. Mrs. Holmes was convicted on four of the 11 counts.
The trial of Balwani, known as Sunny, did not have the fanfare of the Holmes case. However, it serves as a coda to a waning era of start-up growth that often relied on hype and hyperbole. Mrs. Holmes and Mr. Balwani are among the few tech executives who have ever been prosecuted on fraud charges.
Just like Ms. Holmes tried to blame others for Theranos’ mistakes, Mr. Balwani pointed his finger back at her. Throughout the trial, his lawyers argued that many of Theranos’ blood tests worked. They said that Mrs. Holmes, not Mr. Balwani, controlled Theranos. And on Tuesday, they painted Balwani as a true believer in Theranos vision and technology.
Mr. Balwani “put his heart and soul into Theranos,” said Jeffrey Coopersmith, who represents him. “He worked tirelessly, year after year, to make the company a success.”
Mrs. Holmes, now 38, met Balwani when she was 18. They started dating years later, after Mrs. Holmes founded Theranos. Mr. Balwani joined Theranos in 2009, became its chief operating officer and ended up investing $4.6 million in the company and taking charge of its lab. The couple kept their relationship a secret and lived together in a large house in Atherton, California.
In 2016, after Theranos was criticized for lying about its blood testing abilities, Balwani left the company and parted ways with Holmes. The two were accused of fraud together, but Holmes argued in the lawsuits to close the cases and accused Balwani of emotional and sexual abuse. His trial included dramatic testimony recounting the allegations. This matter was excluded from the judgment of Mr. Balwani.
To convict Balwani, prosecutors must convince jurors that he intentionally lied to investors and patients about Theranos’ blood tests and business.
Prosecutors tried to blame Balwani for the financial projections Theranos showed investors and the condition of its labs. New witnesses included investors and executives who dealt directly with Balwani rather than Holmes.
A projection, presented to investors in October 2014, showed that Theranos would raise $140 million that year. In reality, the revenue was $150,000. The following year, Balwani projected nearly $1 billion in revenue from proposals to investors. Theranos internal projections were much lower, the evidence showed, and the reality was $429,210.
Schenk said Theranos leaders instructed their scientists to validate blood tests and start offering them to the public only when they needed money from investors or customers. “Not when the science was ready,” he said.
A new witness, Patrick Mendenhall, who dealt directly with Balwani while making an investment in Theranos, outlined promises that turned out to be misleading or false.
Brian Grossman, an investor in hedge fund PFM Health Sciences who was also a witness in Holmes’ trial, testified that Balwani had provided his team with financial projections that overestimated Theranos’ projected revenue.
“When Balwani communicates with an investor, it’s for a purpose, and the purpose is to trick him into getting money,” Schenk said.
Prosecutors also emphasized Balwani’s role in running the Theranos lab, which the executive called a “disaster zone” in a 2014 text message. Balwani would also “remove dissent” by intimidating or expelling employees who expressed concern about the tests. from Theranos, like Dr. Adam Rosendorff, a former laboratory director who testified in both trials, said Schenk.
Coopersmith, the defense attorney, said the government painted a “highly misleading” picture of Balwani’s time at Theranos and that it was unfair to show private texts out of context as evidence of a conspiracy.
The messages did not show Balwani telling someone to commit fraud, Coopersmith said. “If there was a conspiracy, you’d think there would be all kinds of sinister, conspiratorial talk, and there just aren’t,” he said.
Notably absent from the witness stand were James Mattis, former secretary of defense and board member of Theranos, and Ms. Holmes, who had testified at Mrs. Holmes. Mr. Balwani did not testify in his defense.
If he is convicted, Mr. Balwani and Mrs. Holmes will be sentenced together in September.
Erin Woo contributed reports.