Theranos Executive Sunny Balwani’s Criminal-Fraud Trial Delayed Amid Covid-19 Exposure

Mr. Balwani, who is also the ex-boyfriend of Ms. Holmes, faces a dozen counts of wire fraud and conspiracy to commit fraud. Mr. Balwani has pleaded not guilty to the charges.

Ms. Holmes, Theranos’s chief executive officer who started the company as a Stanford University dropout, 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.

The trial, which has faced delays because of the pandemic, was dealt another setback when U.S. District Judge Edward Davila announced to the courtroom that someone who had been in court Tuesday for jury selection had contact with another person who had tested positive for Covid. The person who had been in court tested negative for the virus, Judge Davila said.

“Out of an abundance of caution,” the judge said, “We’re going to take a break today.”

Mr. Balwani’s trial was previously scheduled to start in January, and then February, but was pushed out to mid-March due to the surge in cases from the Omicron variant. Ms. Holmes’s trial similarly had a hiccup when after just one day of testimony, a juror said he may have had a Covid exposure, prompting the court to cancel a day of trial.

Opening statements in Mr. Balwani’s trial were pushed back already this week because of extended juror questioning. Part of the challenge, particularly for the defense, was that many jurors said they had followed Ms. Holmes’s closely covered trial in the news, and some said they were aware of the guilty verdict in her case and of her romantic relationship with Mr. Balwani.

Many said they had watched a recently released television series based on Theranos on streaming service Hulu—which has had numerous advertisements on social media and elsewhere.

“If you had a close family member who was on trial, would you want a juror seated who had learned the things that you learned from the Hulu show?”

Jeffrey Coopersmith,

Mr. Balwani’s lawyer, asked a prospective juror.

Lawyers spent five days weeding through three panels of prospective jurors to select 12 jurors and six alternates.

Mr. Balwani, 56 years old, 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 Judge 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.

Write to Heather Somerville at [email protected]