SAN JOSE, Calif. (CN) — In the most dramatic day of testimony in an ongoing trial on fraud charges, Elizabeth Holmes, the founder of now-defunct tech startup Theranos, broke down in tears on the stand Monday as she recounted how her business partner Sunny Balwani manipulated her emotionally and forced her into sex during their tempestuous relationship.
"He would get very angry with me,” Holmes said through tears. “Then he would sometimes come upstairs in our bedroom and he would force me to have sex with him.”
Holmes also detailed how Balwani would verbally berate her, accuse her of mediocrity and undermine her self-belief during their time running Theranos, a once-promising company driven to bankruptcy amid allegations of widespread deceit.
The testimony concluded the direct examination portion of Holmes’s extensive time on the stand and amounted to the clearest indication that Holmes’s defense team will attempt to exonerate their client by both questioning whether there was widespread fraud at Theranos while attempting to pin the source of any unethical behavior that may have existed on Balwani.
Holmes certainly appeared sympathetic to the jury as she recounted how Balwani told her that the leadership of her company was akin to a monkey flying a spaceship and that if she was going to succeed in business she needed to act more like a man.
Balwani and Holmes met at a conference in China after her senior year in high school. She was 18. He was 38 and already established as a successful technology business executive. At the time, Balwani told Holmes he helped found Microsoft.
Holmes told the jury she was raped as a freshman at Stanford and that Balwani helped her process the incident. When she formed Theranos in 2003, she brought Balwani on because she idolized him due to what she believed was his considerable business acumen.
“I thought he was the best business person that I knew,” she testified.
But after a federal agency gave Theranos’ lab a substandard rating in 2016, Holmes reevaluated her belief in Balwani’s business skills and ended their romantic and professional relationship that year.
Balwani had been in charge of both revenue projections and the lab operations, the two aspects of the company that federal prosecutors focused most on during the case.
Holmes and her lawyers said Monday that it was Balwani, not Holmes, who maintained purview over those departments.
“Did you have confidence in him to handle the areas for which he was responsible?” asked Holmes' attorney Kevin Downey of Balwani.
“Completely,” she replied.
“Did you often overrule him in the areas of his responsibility?” Downey asked.
“No,” Holmes said.
But Holmes was also quick to establish her independence from Balwani at Theranos, saying he never forced her to make statements to anyone, including executives at Walgreens and Safeway, which both pursued high-dollar business relationships with Theranos.
Holmes also answered in the negative to Downey's questions about whether Balwani controlled her interactions with investors or members of the Theranos board. But she did say his role as mentor, love interest and business partner at Theranos was broad and profound.
“He impacted everything about who I was,” she said. “And I don’t fully understand that.”
Experts have predicted Holmes’ lawyers would foist responsibility for Theranos’ problems and toxic work culture on Balwani. They foreshadowed the tactic in opening statements and the writing was on the wall in 2019, when Holmes first requested to be tried separately from Balwani.
But the drama on Monday came as a surprise, with the normally poised and cheerful Holmes unable to restrain tears at multiple junctures. Her emotional testimony marked the culmination of four days of direct examination for Holmes, an appearance that was a mild surprise to begin with.
On Tuesday, the prosecutors will take up cross-examination, and how they fare at rebutting Holmes’ powerful testimony will go a long way toward determining the outcome of the trial.
If Holmes performs well under the pressure of hostile questioning she may have done enough to convince a jury to spare her jail time. If prosecutors can show Holmes is acting deceitfully on the witness stand, it will be easier for the jury to convict her of fraud in connection to the central allegations of the case.
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