In January, fallen Theranos founder Elizabeth Holmes was found guilty of fraud for deceiving investors about her technology. She claimed the technology could test for hundreds of illnesses with a few drops of blood. While she awaits sentencing, her business partner, Sunny Balwani, will stand trial for his role in the company’s crumbling.
While many questions remain about Balwani’s responsibility in the Theranos scheme, he certainly exercised much power at the company. Most former Theranos employees and investors didn’t know that he and Holmes were dating. They knew him as an arrogant manager with little scientific know-how behind Theranos machines.
When Did Holmes And Balwani Meet?
Based on the book Bad Blood: Secrets and Lies in a Silicon Valley Startup by John Carreyrou, Holmes met Balwani on a trip to China in 2002 when she was 18. She just started her first year at Stanford then. At that time, Balwani was 37 and taking up a master’s program at Berkeley. He was married, but his wife Keiko Fujimoto filed for divorce.
They started to live together in an apartment in 2005. Holmes and Balwani kept their relationship secret from employees and investors. Neither of them publicly acknowledged the relationship until 2017, when Holmes admitted that she had hidden that they were dating.
Holmes and Balwani broke up in 2016. It was when things started to become complicated at Theranos, following rumors that its blood tests were inaccurate.
Balwani Joined Theranos In 2009
During his relationship with Holmes, Balwani became gradually involved in Theranos. When they first started communicating through e-mail, he offered business advice. He also helped her with the financial aspects of the company. In 2009 he blew a $13 million personal loan for her second round of funding. He officially joined the company as its president and COO six months later, albeit having no experience in science or health.
Balwani handled the day-to-day company management, while Holmes focused on the bigger responsibilities. Former employees have spoken about his intimidating management styleOne former employee says Balwani’s nickname in the office was “The Enforcer.”
Holmes Claims She Was Abused And Manipulated
On her trial, Holmes’s defense labeled her a naive businesswoman who was misguided into lying to her investors. That story pointed the blame on Balwani. Holmes claimed he manipulated her into lying about her technology. She also claims that Balwani constantly undermined her confidence, criticized her, and credited himself with her achievements.
Holmes said that their relationship was abusive. However, Balwani vehemently denied the allegations, referring to them as “false and inflammatory” in court documents. Likewise, Holmes’s testimony wasn’t consistent with her reported behavior in the company. Many employees described her as a hands-on leader and in control of her company. For them, Balwani seems to defer to her most of the time.
Her claims are also inconsistent with how she called her leadership style in the past. In 2017, she told the Securities and Exchange Commission (SEC) that she was “the ultimate decision-maker” for her company. Finally, the jury found her guilty of four counts of fraud from deliberately lying to her investors.
Balwani’s Trial Began On March 9
In 2018, the SEC indicted Holmes and Balwani with security fraud, accusing them of raising more than $700 million based on fabricated claims about the company. Holmes settled without admitting her crime. Instead, she agreed to surrender voting control and obey a ten-year ban from helming a public company. Balwani seems to be still defending himself from the charges.
A federal grand jury charged both of them with nine wire fraud and two counts of conspiracy to commit wire fraud. Holmes’s attorneys revealed the abuse allegations and pushed to separate the cases, which the judge approved. After numerous COVID-related delays, jury selection for Balwani began on March 9.
