Elizabeth Holmes’s Ex-Boyfriend Set to Go on Trial in Theranos Case – The New York Times

Elizabeth Holmes was a star entrepreneur whose trial for defrauding investors in her blood-testing start-up became one of the biggest Silicon Valley spectacles since the introduction of the iPhone. Her conviction in January marked a rare moment in the boastful history of technology: A chief executive was held criminally responsible for lying.

For much of her trial, Ms. Holmes sought to blame her deputy and former boyfriend, Ramesh Balwani, for what went wrong at her company, Theranos. Now Mr. Balwani, who is known as Sunny, will have the opportunity to respond in his own fraud trial. Jury selection began on Wednesday in the same federal courtroom in San Jose, Calif., where Ms. Holmes’s fate was determined.

The first trial offered, and the second trial promises, a close examination of an unusual relationship between a young woman and an older man. Ms. Holmes and Mr. Balwani had a secret romance that was also a professional alliance, an exciting promise to improve health care for millions that instead put patients at risk. Their blood testing did not work, even as they assumed new and better technology would rescue them from their reckless claims.

Mr. Balwani, 57, is a former software executive who made a fortune during the late 1990s dot-com boom. He befriended Ms. Holmes when they were studying in China the summer before her freshman year at Stanford University. Their romantic relationship eventually led him to join Theranos in 2009 as president and chief operating officer.

He was the opposite of a star, barely mentioned in the glowing cover stories about Ms. Holmes and Theranos. By all evidence, however, Mr. Balwani and Ms. Holmes, now 38, were a team that ruled the start-up tightly. Few knew they were in a relationship.

“She was the Wizard of Oz, dazzling the investors and media, but he was the one behind the curtain working the machinery,” said Reed Kathrein, a San Francisco lawyer who successfully sued Ms. Holmes and Theranos in 2016 on behalf of investors. He said he was confident the prosecution would show that “he knew she was lying and never put a stop to it.”

“He knew everything,” Mr. Kathrein said.

Mr. Balwani’s trial will go over familiar ground. He faces the same 12 charges that Ms. Holmes initially confronted. (One count was dropped after a procedural error by the government.) He has pleaded not guilty.

Ms. Holmes was found guilty on four counts of defrauding investors and acquitted on four counts of defrauding patients; the jury deadlocked on the remaining three investor counts. She will be sentenced in the fall.

The consensus among legal experts following the case is that the government’s successful prosecution of Ms. Holmes will give it a boost in Mr. Balwani’s trial.

“​​The government has had the opportunity to do a full run, so they will have learned what worked and what didn’t,” said James Melendres, a former federal prosecutor who represents corporate clients.

Prosecutors, Mr. Balwani and his lawyers declined to comment. Through her lawyers, Ms. Holmes declined to comment.

While Ms. Holmes’s background has been extensively documented, relatively little is known about Mr. Balwani, including why he is called Sunny.

An experienced software executive, he had the good luck to have his start-up purchased by a larger firm right before the 2000 stock market crash, yielding him about $40 million. He got a divorce, went back to school to get an M.B.A. and study computer science, and bought fancy cars. (His license plate, in a nod to Karl Marx, was DASKPTL.) When he joined Theranos, he invested millions of his own money in it, his lawyers have said.

At Theranos, he had a reputation for being a harsh, demanding boss who became increasingly paranoid that employees would steal trade secrets that would supposedly revolutionize blood testing. In an incident recounted by the journalist John Carreyrou, Mr. Balwani called the police to chase after a departing employee, explaining that the former worker “stole property in his mind.”

Mr. Balwani’s lawyers are expected to emphasize his lack of experience in biomedical devices, which were at the heart of Theranos’s claims. Legal experts said he was unlikely to testify. He’d most likely be less sympathetic on the witness stand than Ms. Holmes, a new mother who played up her youth and arrived in court holding hands with her mother and her partner.

“He doesn’t have those optics in his favor,” said Ann Kim, a former federal prosecutor who represents companies undergoing government investigations.

When Ms. Holmes took the stand in her defense, she tried to upend the narrative around her spectacular downfall, introducing bombshell allegations of abuse against Mr. Balwani. He denied the accusations, and text messages released during the trial depicted a relationship of more or less equals, especially as the company came under pressure from whistle-blowers and the media.

“The whole thing that we have to respond to liars is ridiculous,” Ms. Holmes fumed in one message. Mr. Balwani promised retaliation against their accusers: “We will also take legal action once this is behind us.”

At the heart of the government pursuit of both defendants is the argument that they stepped over the line from hype — as common in Silicon Valley as breathing — into deceit.

Ms. Holmes could conjure up an alternate reality with the effortless ease of her role model, the Apple co-founder Steve Jobs. Witnesses in her trial testified that she had made people believe she would change the world. Investors poured nearly $1 billion into Theranos.

Mr. Balwani, like most of dull humanity, possessed no such gifts. There is only one video of him online, but it is revelatory of his style.

In March 2014, when Theranos was rolling out its finger-prick blood testing system in Walgreens in Arizona, Mr. Balwani gave a presentation on “Healthcare Innovation” to the Arizona Senate’s Health and Human Services Committee. He wasn’t originally supposed to do it — Ms. Holmes had to cancel — and did not look like he was enjoying himself.

Mr. Balwani told the legislators that the company was working on “something that we believe is magical.” He talked about one particular patient, who “had no limbs.” When this man had to give blood, the needle went into his neck. At the Theranos clinic, however, “he had a small limb attached to his body” and “we were able to do a finger prick on him.”

How a limbless individual suddenly gained a limb was not explained. It was almost as if Mr. Balwani had dared the senators to point out that Theranos was literally magical thinking.

They did not. Instead, they saluted him.

“I love bringing the free market to our health care system,” said State Senator Kelli Ward, a Republican, who noted that she was a family doctor.

(Senator Ward is now the chair of the State Republican Party and was active in efforts to overturn local election results in favor of President Trump. “It’s even clearer now that we need to allow the free market to work,” she said in an email.)

Neither the prosecution nor the defense has filed its final list of witnesses for Mr. Balwani’s trial. In December, the lawyers filed their proposed questionnaires for potential jurors, including a preliminary witness list.

A handful of potential witnesses from the Holmes trial were struck for obvious reasons, including Ms. Holmes’s mother, Noel, and former Secretary of State Henry Kissinger, a Theranos board member. Mindy Mechanic, the Holmes team’s expert witness on domestic abuse who ultimately did not take the stand, was also removed. Mr. Balwani’s legal team named experts on forensic accounting, intellectual property and SQL databases.

One potential witness for the government would make headlines. Ms. Holmes is, however, exceedingly unlikely to testify, even if doing so might reduce her prison sentence.

“She seems likely to fight this to the end of the earth,” said Jen Kennedy Park, a white-collar defense lawyer.