Hi Dropout listeners, it's Rebecca.So, by now you have probably heard the news, Sonny Balwani was convicted of 12 counts of criminal fraud.
Minutes after the verdict came down, I got a call from my colleague Brad Mielke, inviting me to come on his daily news podcast, Start Here. and talk through the jury's decision.I want to share a conversation with you.
And while you're listening, click the link in our episode description to follow Start Here and get a wrap-up of the day's top headlines each morning.Now, here's my conversation with Brad.
I know that we made so many mistakes on this front, but we were trying to take this forward.And at that time, thought that we were doing the right thing."
Elizabeth Holmes said the downfall of Theranos wasn't her fault, it was her business partner's.
That's why her mega-blood testing company had failed, and why its incredible claims of using just a drop of blood for accurate, reliable tests in your local drugstore just didn't hold muster.
The jury did not buy her excuse, and earlier this year convicted her of fraud.Well, of course, that business partner then turned around and said, none of this was my fault, it was Elizabeth Holmes, the guilty one.
But yesterday, a different jury rejected his story as well and convicted Sonny Balwani in one of the biggest medical fraud cases in recent history.
Nobody has covered this story and these trials as closely as ABC's Rebecca Jarvis, host of the hit podcast, The Dropout.And Rebecca, actually, since we'd last spoken, this is now a hit series on Hulu as well.So I should be plugging that.
How significant was this verdict yesterday?
Well, it's really interesting, Brad.Thanks for the plug, by the way.It's really interesting when you look at the difference in outcomes of these two trials.
In the case of Sonny Belwani, he has been convicted of 12 counts, all the counts of fraud against him.But in the case of Elizabeth Holmes, she was only convicted of four and was charged with the same issues.
It's a fraud that not only defrauded investors of nearly a billion dollars, but that also put patients in harm's way.
The nurse called me back and she said, I am so sorry, that's not good.There could be a tumor growing somewhere.I will never forget that day.
Both of them were accused of defrauding both patients and investors with their blood testing technology, with claims that they lied to investors as well as to patients about the capacity of Theranos blood tests.
Well, in the case of Sunny Balwani, a jury has now decided that, yes, there was conspiracy to defraud both groups,
I don't believe the actions intended to hurt patients.That's the one hurdle I could not get past on that.
Whereas in the case of Elizabeth Holmes, jurors decided that they could only convict her on the counts involving investors.And some of those counts were even dropped because the jury couldn't come to a conclusion.
I was going to say, so I was going to ask if this means they were conspiring together or if these two different juries are saying these are really two different sets of crimes here.
Brad, originally Sunny Balwani and Elizabeth Holmes were charged together as co-conspirators.They were supposed to be tried together as well.
Instead, their trials were severed, and they were severed because of these claims Elizabeth Holmes made that she was abused by Sunny Balwani.Now, these are claims that he has firmly denied.
They did not come up at his trial, but for her, during her seven days of testimony, they were a big portion of what she talked about. In his case, he did not take the stand.He faced the identical case from prosecutors.
The government brought the exact same witnesses to the stand to testify against him.The biggest difference is that he didn't take the stand to say, I didn't do this, or to raise his own objections to the claims against him.
And it's ironic, Brad, if you look at these two cases, the pointing of the fingers at each other, because when I spoke to Jeff Cooper Smith, the lead attorney for Sonny Belwani, years ago, immediately after the charges were brought against the two, does he feel in any way that he was duped by Elizabeth Holmes?
No, that's not. what is going on here."
Back then, the word was, nope, she didn't do Sunny Balwani, they were in this together, this was a business failure, and they both were mistaken.
But when you look at how both of their attorneys pursued the trials once they were severed, it was very much a Well, he made the mistakes, he made the errors, he made me do it, or she did.
Wait, he told you like they were in on this together, and now he's saying, oh, no, no, actually, the whole defense was like, actually, she was the mastermind here.He didn't know what was going on.
Exactly.And there were a lot of emails that the court read and that were read aloud.
For example, there was this one at Sonny's trial where they presented a text message from Sonny to Elizabeth, and it read, I am responsible for everything at Theranos.
Well, that was in the context of a lot of other text messages, but it very likely made a big difference with jurors at this trial.
And when you think about these two people who are both charged with the identical crimes, and you think about a jury who is supposed to know nothing about any of their backstory, and they're shown these things, like in Elizabeth Holmes' case, pictures of her,
so much younger than him, supposedly having to rely on him for his expertise, you can imagine where the jury may have found that presentation more sympathetic than Sonny Belwani, who had experience, maybe should have known better, and how the outcome could be different as a result.
We've made it possible to run comprehensive laboratory tests from a tiny sample.
There's very likely jail time coming, Brad, but there's also these appeals.And then there's also what it says for the broader business world.And one of the very important lines that has drawn in the sand is that you can't lie.
So much about this is defrauding investors, defrauding people that you legally owe money and promises to.However, you also always think of the broader general public here and the patients that we're counting on this stuff to work as well.
End of these trials, but perhaps not the story.Rebecca Jarvis, host of The Dropout.Thanks a lot.
By the way, Dropout fans, if you're into a quick breakdown of the day's news with great interviews, clarifying reporting like this, including from our own Rebecca Jarvis on all the biggest business stories of the day, check out Start Here wherever you're listening now.
I'm Brad Milkey.Thanks for listening.
