What to expect at Sunny Balwani’s trial
Photo: David Paul Morris/Bloomberg via Getty Images

What to expect at Sunny Balwani’s trial

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Good morning! The Theranos drama didn’t end with the conviction of Elizabeth Holmes. Sunny Balwani played a pivotal role in the company’s implosion, but just how pivotal is the question at the heart of his trial. I’m Veronica Irwin, and though I showed up to court at 6 a.m., I didn’t need to; the courthouse had tons of empty seats.

Who’s the real villain in the Theranos story?

Sunny Balwani faces the same charges as Elizabeth Holmes: 10 counts of wire fraud and two counts of conspiracy to commit wire fraud. Balwani has pleaded not guilty to all charges.

During Holmes’ trial, her defense team painted Balwani as the villain, claiming that he knew better than Holmes what was happening in the Theranos lab and that his inaccurately rosy claims were passed on to potential clients and investors.

The prosecution in this case argues that Balwani and Holmes were a team. “They were partners in everything, including their crimes,” prosecutor Robert Leach said during opening arguments yesterday.

  • The prosecution will lay out its argument in three parts: First, Theranos’ miniature blood analyzer, nicknamed Edison, was not as useful or accurate as they claimed. Second, Theranos convinced reporters to write stories that would raise the company’s profile. Holmes and Balwani then worked together to use that media profile, along with false claims about Edison, to bilk millions of dollars from investors and patients.
  • Leach argued that Balwani misled and spoke “half truths” about Theranos’ relationship with major pharmaceutical companies and the Department of Defense to woo investors.

Balwani’s defense is that Theranos was Holmes’ brainchild. “Sunny Balwani did not start Theranos, he did not control Theranos, he did not have final decision-making authority at Theranos,” Balwani’s attorney, Stephen Cazares, argued.

  • It was Holmes who had cultivated relationships at the Department of Defense and with major pharmaceutical companies, the defense said — long before Balwani ever joined the company in 2009.
  • The defense also blamed Walgreens and Theranos’ scientists, claiming that Balwani was only a messenger, at worst blinded by his belief in the company’s future. Balwani “never intended to deceive anybody,” Cazares argued.
  • A third — and possibly the most interesting — argument from Balwani’s defense was that the government was to blame for not doing its due diligence. Theranos handed over a hard drive to the Department of Justice with encrypted data for more than 9 million Theranos patient results back in 2018. The DOJ didn’t analyze that database, and therefore, Cazares argued, the government cannot definitively say whether Theranos’ technology worked. That’s one we haven’t heard before.

Here’s what to expect over the next three months: The first witness, Erika Cheung, was called to the stand shortly after opening arguments. The former Theranos lab associate became a whistleblower when she reported that the company's technology consistently failed quality control tests.

  • During the Holmes trial, Cheung said that the tests were about as accurate as a coin toss, but we didn’t hear any such bombshells yesterday. But there’s more to come from the prosecution.
  • Defrauded investors, retailers, former lab directors and pharmaceutical company executives are expected to take the stand.
  • Holmes is also on the witness list, but neither the prosecution nor defense mentioned the possibility of her testifying during opening arguments, so it’s unclear whether she’ll actually appear.

Holmes and the Theranos drama have been the center of a book, podcast, documentary and now a TV show. But Holmes’ attorneys argued that Balwani was the real villain of the story all along. Prosecutors in this case will argue: Why not both of them?

— Veronica Irwin (email | twitter)

A MESSAGE FROM 4-H

Gen Z is poised to impact everyone - from a rural small business to a tech giant - rethink how their business operations can help alleviate the digital divide. It’s time to give Gen Z a seat at the table for the generation that sees how tech can be a benefit but often is the barrier for advancement.

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People are talking

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  • “At this point in the quarter, we continue to see audiences spending less time on Facebook.”

There's still hope for social media, Stewart Brand thinks:

  • "The opprobrium that came on Twitter and Facebook and so on has sort of paid off. They are putting serious time and money and people into trying to alleviate the worst offenses.”

The SEC said Elon Musk can’t wish away the deal he made over his tweets:

  • "When it comes to civil settlements, a deal is a deal.”

Making moves

Intel’s Pat Gelsinger and Micron’s Sanjay Mehrotra will testify today and are expected to call for chip subsidies.

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Loni Mahanta joined OpenSea as VP of Policy and Government Affairs. Mahanta last worked at Brookings as a nonresident fellow.

John Vilja left Blue Origin as SVP of Blue Engines to pursue his interests outside work.

Aziz Hasan is leaving Kickstarter as CEO later this month. Sean Leow is filling in until the company finds a permanent replacement.

Britton Smith is Blue Bird’s new SVP of Electrification and chief strategy officer. Smith has held leadership roles at companies like KPMG and McKinsey.

Mark Wilkie is the new head of engineering at Semafor, the forthcoming media company from Ben and Justin Smith. Wilkie was formerly the CTO at BuzzFeed and Apartment Therapy, and is “a legend” in the media tech world, Ben told us.

In other news

U.S. government officials are probing DiDi to determine whether it threatens national security, but it’s unclear what consequences would come of it.

More women and underrepresented workers at Apple are filling leadership roles. The overall number of women and employees from underrepresented groups is growing, too.

Okta services weren’t hacked, the company confirmed. The reports of a possible breach are actually tied to a hack that occurred earlier this year. But the company did say up to 2.5% of customers may have had their data accessed.

Apple is doubling down on podcast tools. Beginning next month, podcasters can start tracking audience analytics and access features to “help jump start their subscriptions.”

Bored Apes are coming to a metaverse near you. The creator of the Board Ape Yacht Club NFT collection is using newly earned funds to get into gaming and build on its metaverse project called Otherside.

Problematic YouTubers are making money elsewhere, according to a new report. The researchers recommend that YouTube partners with other monetization platforms, like Patreon, so that they can help each other identify bad actors and respond accordingly.

YouTube is starting to look more like a streaming service. It just added 4,000 episodes of shows like "Hell's Kitchen" and "Unsolved Mysteries," all free as long as you're willing to watch ads.

Zoom will let you join calls as an animal. The platform is adding other avatar options down the line.

Walk and talk

It’s easy to schedule a 1:1 over Zoom. But GoodRx CEO Doug Hirsch likes to schedule time to take walks with every single one of his workers.

The idea is to eliminate any expectations that come with meeting your boss in an office. Hirsch said the walks soften the boss-employee relationship and help him get to know his staff on a more personal level; he asks employees questions, like what they do for fun. Hirsch allots time for a few walks per week with workers, plus a couple with his co-founder. And outside of getting to know employees, there’s the added benefit of getting some fresh air. Sounds like it's worth a try.

A MESSAGE FROM 4-H

People often think of the digital divide as being just about broadband access, but it is also about understanding the needs and tech literacy levels across roughly six generations. Gen Z could help companies develop products and apps that better serve the needs of our communities, our country and our world.

Learn more

Thoughts, questions, tips? Send them to sourcecode@protocol.com, or our tips line, tips@protocol.com. Enjoy your day, see you tomorrow.

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