This story contains mention of sexual assault.
Elizabeth Holmes has blamed many people along the way for the swift downfall of her blood-testing startup, Theranos. But on the fourth day of her testimony in the fraud case against her, she pointed the finger at the man who was once her close professional and personal partner: Sunny Balwani.
Along with testifying that Balwani, former COO and president of Theranos, was in charge of its lab operations and finances with little oversight, Holmes testified that he controlled her life down to the minute, including daily schedules, diet plans and critiques on the way she talked in the course of a decade-long romantic relationship which they hid from the company.
Balwani faces his own fraud charges related to his work at Theranos, for which a separate trial is scheduled to start in January.
Verbal abuse occurred often, Holmes testified. She said Balwani told her what to eat, how to exercise discipline and how to act more like a man in order to better lead Theranos. According to Holmes, Balwani said she came across as a “little girl” and needed to rein in her excitement in interactions.
In one note presented to the jury, Balwani wrote to Holmes "do everything I say — word for word.” Another handwritten note listed out tenets for her to live by:
"I do not react.
I am always proactive.
I know the outcome of every encounter.
I do not hesitate."
Along with detailing the control Balwani had over her, Holmes also said he sexually abused her.
“He would force me to have sex with him when I didn’t want to because he wanted me to know that he still loved me,” she testified.
An attorney for Balwani denied all allegations against him, the Wall Street Journal reported.
The testimony appears to undercut the suggestion that Holmes exercised control over all decisions at the company. In a deposition for the SEC in 2017, Holmes said “I’m the CEO. I’m the ultimate decision maker for the company.”
Holmes met Balwani on a trip to China when she was 18 and he was two decades her senior. She was studying at Stanford at the time. Their romantic relationship started in 2005 and ended in 2016. In one 2015 text exchange presented to the jury, Balwani wrote to Holmes, "I have molded you." Though she denied that Balwani controlled her or forced her to lie to investors and partners, she said "he impacted everything about who I was and I don’t fully understand that."
Holmes testified that she did not overrule Balwani’s authority over Theranos lab operations and finances, claiming she “completely” had confidence in areas in which he was responsible. Even as the Centers for Medicare and Medicaid Services closed in for its inspection of Theranos labs in fall of 2015, which led to the shutdown of testing at the lab the following year, she said Balwani told her “the lab was in great shape, and the inspection should go well.”
Things were not fine. The CMS inspection "had not gone as expected," Holmes testified, as inspectors found a number of issues. The Wall Street Journal had also published its exposé on the company in 2015, and "continued articles were published that were attracting a lot of attention," she said. This marked the beginning of the end for the company.
Holmes testified that she revered Balwani as a business expert. But after the inspection, he “wasn’t who I thought he was,” she said. This was when she decided she needed him out, she said.
After Holmes and Balwani broke things off personally and professionally, she hired Kingshuk Das, a pathologist, as full-time lab director in 2016, agreeing to void all Theranos tests on Das’ recommendation because "we didn't know what to make of them." Holmes said after Balwani’s exit, she hired new board members and executives, and changed the company’s business strategy.
Testifying about Balwani’s abuse led Holmes to her only show of real emotion so far in the trial. The normally poised founder, known for rarely blinking, broke down crying. It was a stark contrast from the confident tone she started the day with, when she discussed her vision to expand access to health care and starkly denied misleading investors about the company’s partnership with the U.S. military, claiming she was “incredibly proud” of the work Theranos was doing in its early days.
The explosive testimony was the final big play of her defense, possibly as a tactic to engender sympathy from the jury as she goes into a likely grueling cross-examination by government prosecutors. Her trial will resume Tuesday morning at the federal courthouse in San Jose.
