- [Reporter] Are you gonna appeal?
- [Narrator] In January, Theranos founder,
Elizabeth Holmes was convicted on four fraud charges
in her highly publicized criminal trial.
Now Holmes' former top deputy,
and ex-boyfriend, Ramesh Sunny Balwani,
is about to go on trial for similar charges
of defrauding investors
and patients about the startup's blood testing capabilities.
Balwani has pleaded not guilty.
- He's a really important supporting character
in the tale of Theranos.
He was the person closest to Elizabeth Holmes,
the star of Theranos
for the entire time that she ran the company.
- [Narrator] Prosecutors say
that Theranos' blood testing technology
didn't work as promised
and that Holmes and Balwani lied
to attract more investments
as the company ran out of cash.
As the trial gets under way,
here's an overview of Balwani's alleged role
at Theranos, and a look at what's to come
in his criminal fraud trial.
Balwani faces federal charges nearly identical
to those in Elizabeth Holmes' case.
Two counts of conspiracy to commit wire fraud
and 10 counts of wire fraud.
- In the end, one of those charges
was dropped against Elizabeth Holmes
due to an error by the prosecution.
It was a charge related to a patient
that had taken a Theranos test.
Although Mr. Balwani and his team
are fighting to get that charge dropped as well.
- [Narrator] Balwani met Holmes
when she was a teenager
and jointly ran Theranos with her
as chief operating officer.
Holmes and Balwani were also in a romantic relationship
that spanned more than a decade,
growing and fading alongside the rise
and fall of Theranos.
Former employees said Balwani enforced a corporate culture
of secrecy and fear
until his departure in the spring of 2016.
- He was not the ultimate decision maker as she was
but he was the chief operating officer
and he oversaw the lab.
So he had tremendous influence
and tremendous power at Theranos.
- [Narrator] Through witnesses and evidence,
the prosecution and defense portrayed him
as a complicated figure
who both contributed to and tried
to remedy problems at Theranos.
- So we have a really conflicting picture I think
from Ms. Holmes' trial
about how much Mr. Balwani may have contributed
to the many problems at that lab
because of his leadership
and also how much he tried
to perhaps fix some of the problems.
And I think it'll be really interesting
to see the extent to which that is cleared up
in Mr. Balwani's trial.
- [Narrator] Holmes testified that Balwani
was in charge of the lab operations
and financial projections shared with investors
as president and chief operating officer.
The defense argued that Holmes believed
she was telling the truth about Theranos
because she relied on Balwani for accurate information
about the company's operations.
- So there was a lot of testimony to show
that the lab had a lot of problems
and a lot of those problems seemed
to be traced back to Mr. Balwani.
We also saw text messages and emails
and other pieces of evidence
that suggested that he was very passionate about the company
and really did take efforts at times
to try to remedy the problems.
- [Narrator] The prosecution also called several witnesses
who revealed how Balwani treated Theranos employees.
Former lab worker Erika Cheung testified
that Balwani rebuffed her attempts
to raised concerns about Theranos' technology.
- From the witnesses called by the prosecution,
specifically former employees of Theranos,
I think we got a consistent picture
that Mr. Balwani is not a nice guy.
He's a guy with a short temper, a short fuse.
He could be really hard on employees.
He challenged people such as a former lab worker,
Erika Cheung, about why she was raising questions
about lab practices.
- [Narrator] The defense and prosecution
also showed hundreds of text messages
that offered a glimpse into Balwani's romantic
and business relationship with Holmes.
- They show really the complexity
of their personal relationship
and also how intertwined their personal relationship was
with their business one.
And the messages also show importantly
the influence Mr. Balwani tried to have
over how Ms. Holmes ran the business.
In many cases, it's trying to correct things
that are wrong with the company.
For instance, saying we need FDA clearance.
- [Narrator] That 2015 text message referred
to clearance from the Food and Drug Administration,
which would declare the company's signature Nanotainers
to collect finger-pricked blood
an uncleared medical device.
In a separate message, he said that company's lab
was a disaster zone.
- And the prosecution was able
to use those text messages at times
to show that there were problems at this company
that Elizabeth knew about,
that she was informed of.
- [Narrator] A pivotal moment in Holmes' testimony came
when she accused Balwani of emotional and sexual abuse.
She claimed Balwani controlled all aspects
of her life, including how much she should eat and sleep
and when she could see family and friends.
A lawyer for Balwani denied the abuse allegations.
- At the end of the day,
she said in her testimony
that well, she blamed him for exerting control
over aspects of her life.
Elizabeth testified that Mr. Balwani
did not have control over what she said
to investors about the company,
over what she said to business partners
or over what she said to journalists.
- [Narrator] Pre-trail court filings
from Balwani's attorneys
could also offer insight into what's to come
in his criminal trial.
In one November 2021 filing,
Balwani's defense team sought to limit evidence
involving patients, including the results
of tests that were performed
using non-Theranos diagnostic equipment.
The judge denied that request.
In order for Balwani to be found guilty,
the prosecution must prove beyond a reasonable doubt
he had the intent to defraud patients or investors
about the efficacy of Theranos' blood testing technology.
- So in the case of investors
that Mr. Balwani told a lie
that was significant enough that an investor thought oh,
well, that's great.
I'm going to invest in that company
and that might have been a revenue projection
or a claim about their relationship
with Walgreens, the pharmacy chain
that wasn't true but that was appealing enough
that it caused an investor to write them a check.
(dramatic music)