What to expect at Sunny Balwani’s trial

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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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.

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