Theranos Executive Sunny Balwani’s Criminal-Fraud Trial Delayed Amid Covid Exposure

Ms. Holmes, Theranos’s chief executive officer, was convicted in January on four counts of criminal fraud tied to lies she told to investors about her company’s technology and business operations. She will be sentenced in September.

Lawyers for both sides were scheduled to make opening statements in the case against Mr. Balwani, 56 years old, who was chief operating officer and president at Theranos from 2009 to 2016. Prosecutors allege Mr. Balwani misled patients and investors about the capabilities of Theranos’s blood-testing technology, enticing them with claims that the company could test for more than 200 health conditions using just a few drops of blood from a finger prick.

In Ms. Holmes’s trial, jurors heard a different reality: The company used its proprietary device for just 12 types of patient tests, and relied on commercial blood analyzers for the rest. The results were unreliable, according to trial testimony, at times giving false test results for cancer, HIV, blood disorders and pregnancy.

Theranos dissolved in September 2018, losing most of the $945 million investors poured into the company.

Mr. Balwani’s name was brought up repeatedly by witnesses in Ms. Holmes’s trial, as the source of financial projections given to investors that turned out to be inflated and inaccurate, and as co-architect of a company culture of fear, isolation and retaliation. The trial divulged details of Mr. Balwani’s romantic relationship with Ms. Holmes that spanned more than a decade, largely through the publication of hundreds of text messages the onetime couple exchanged.

When Ms. Holmes took the stand in her own defense, she alleged Mr. Balwani emotionally, psychologically and sexually abused her for years, saying that he controlled what she ate, how much to sleep and when she could spend time with her family and friends.

A lawyer for Mr. Balwani has denied all allegations of abuse, calling them “deeply offensive to Mr. Balwani, devastating personally to him.”

Ms. Holmes and Mr. Balwani were indicted together in June 2018, but U.S. District Judge

Edward Davila

agreed in March 2020 to Mr. Balwani’s request to sever the trials so they would have separate court appearances. Judge Davila presided over Ms. Holmes’s trial and will also oversee Mr. Balwani’s proceedings.

Mr. Balwani’s trial will cover familiar ground, since he faces nearly identical charges to Ms. Holmes. Some witnesses will make repeat appearances. A lawyer for Mr. Balwani said jurors may hear from former Theranos lab worker Erika Cheung and former lab director Adam Rosendorff, who each gave key testimony in Ms. Holmes’s trial. Mr. Balwani’s lawyers have made many of the same motions that Ms. Holmes did to exclude certain evidence and testimony.

With Mr. Balwani, prosecutors might look to improve their case regarding the patients Theranos allegedly defrauded. Ms. Holmes was found not guilty of five of six fraud charges related to patients. The government was forced to drop the sixth charge midway through trial, after making an error that involved mixing up the names of blood tests.

Lawyers agreed this week on a jury of 12 people plus six alternates who will weigh the evidence against Mr. Balwani. Ms. Holmes’s jury of 12 lost three members during her 15-week trial, likely prompting the increase of the alternative pool to six from five. Ms. Holmes’s trial took 15 weeks; Mr. Balwani’s trial is expected to last 13 weeks.

Write to Heather Somerville at [email protected]