Legal Experts Predict Ex-Theranos President/COO Ramesh ‘Sunny’ Balwani Faces Uphill Battle for Acquittal
‘Balwani is no Johnny Depp,’ says an expert on juror behavior, as prosecution and defense rest in fraud trial of the former executive of the now-defunct lab test company
Clinical Laboratory directors and pathologists continue to focus like a laser beam on the trials of former founders and executives of the now-defunct blood test company Theranos. But as the criminal fraud trial of ex-president and COO Ramesh “Sunny” Balwani comes to a close, legal experts maintain the 57-year-old businessman may face an uphill battle to win an acquittal.
Balwani faces 12 counts of wire fraud and conspiracy to commit wire fraud while serving as second in command at Theranos, the former Silicon Valley medical laboratory test startup. The fraud trials of Balwani and Theranos founder Elizabeth Holmes have made headlines for more than a year as the two once-high-flying executives face a reckoning for allegedly defrauding patients, investors, and physicians about their proprietary Edison blood-testing device, which they claimed could conduct hundreds of blood tests using a finger-prick of blood.
Before resting their case, Balwani’s defense team called only two witnesses: information-technology consultant Richard Sonnier III, and naturopathic physician Tracy Wooten, NMD, of Arizona, who sent more than 100 patients to Theranos.
According to The Wall Street Journal(WSJ), Wooten “backtracked some of her support for Theranos on the stand.”
The WSJ reported that Sonnier’s testimony “had been hotly litigated by attorneys,” and that US District Judge Edward Davila ruled in May that Sonnier would be permitted to testify—with limitations—about the Theranos Laboratory Information System (LIS), which contained patient test results.
Theranos LIS Not Accessible to Government Prosecutors
Sonnier was hired by Balwani’s legal team to assess the accessibility of data held in the LIS, which the defense believed would have provided evidence of Theranos test accuracy.
The WSJ noted that in 2018, the year Balwani and Holmes were indicted, the government subpoenaed a copy of the LIS, which Theranos provided. However, the LIS data was delivered on an encrypted hard drive.
“Not only was the hard drive itself encrypted, but the data it contained was also encrypted with a separate passcode required,” the WSJ wrote. “The government didn’t have the passcode to access the data, and a day or two after sending the hard drive to US attorneys, Theranos officials ordered the entire original database dismantled, according to court testimony.”
The WSJ reported that Sonnier testified he was unable to access the encrypted data on a backup hard drive despite having a list of possible passcodes found in Theranos documents. Sonnier also testified that it would have been “very straightforward” to reassemble the original LIS and “recover that data.” The missing password wouldn’t be an issue, Sonnier testified.
The Prosecution Rests
Federal prosecutors rested their case last month after calling more than 24 witnesses. The government alleges Balwani worked closely with Holmes and conspired with her to defraud investors and patients about the startup’s blood testing technology. They allege he knew about the accuracy and reliability problems that plagued Theranos’ Edison blood-testing device.
Holmes was convicted in January on three of the nine fraud counts and one of two conspiracy counts. She was acquitted on four counts related to defrauding patients, one charge of conspiracy to commit wire fraud and three charges of wire fraud.
While prosecutors failed to persuade jurors that Holmes intentionally sought to defraud patients, Bloomberg legal reporter Joel Rosenblatt told the Bloomberg Law Podcast he believes Balwani is “inherently more vulnerable” on the patient-related fraud counts because he “oversaw” the operation of Theranos’ clinical laboratories.
“As a result of that role, [Balwani] was more aware of not only the faulty Theranos blood test results, but all the problems that employees were pointing out about those results,” Rosenblatt added. “So, he was the first high-level executive to be dealing with those complaints.”
Rosenblatt noted that Balwani’s defense centers not only on trying to show that Theranos’ proprietary blood-testing machine worked, but that it “works maybe well enough or worked as well as other [medical] laboratories.” He said Balwani also maintains that Holmes, as CEO and founder, was in charge long before he joined Theranos as president.
“It’s a difficult argument to make because all the emails show how cooperative they were, how closely they worked together. They were intimately involved but they were working side by side for years and really during the years where all the money started coming in,” Rosenblatt said in the podcast.
“He has a lot of problems that [Elizabeth Holmes] didn’t have,” Taylor said. “He kind of fits the part from a juror’s standpoint. He’s got the power, the authority, he’s got the personal traits that make the allegations more credible from a perceptual standpoint for the jury.”
In contrast, Taylor says, “People don’t love Elizabeth Holmes, but I think what she had going for her was that she pitched herself as a true believer in the company. She was the voice and the face of Theranos.”
‘Balwani is not Johnny Depp’
While a jury recently awarded actor Johnny Depp significantly more damages than actress Amber Heard in their well-publicized defamation trial, Taylor maintains jurors are unlikely to view Balwani as a sympathetic figure.
“Sunny Balwani is not Johnny Depp. He doesn’t have the halo that Johnny Depp has, or the fan base,” Taylor said. “He does not present as that type of person, so I don’t know that the jurors will have any sympathy towards him. And I think they would actually be more inclined to believe Holmes’ allegations.”
The Theranos fraud trials of Holmes and Balwani continue to capture the attention of clinical laboratory directors and pathologists who are now witnessing the final chapters in the downfall of the one-time Silicon Valley power couple.
—Andrea Downing Peck