Ramesh ‘Sunny’ Balwani, former No. 2 executive at Theranos.
Photo: Justin Sullivan/Getty Images
Elizabeth Holmes jotted down reminders on hotel stationery for how to conduct herself as chief executive officer of blood-testing startup Theranos Inc.: “I speak rarely” and “I show no excitement”; also, “I do everything I say—word for word.”
The notes were presented as part of Ms. Holmes’s testimony last week in her criminal-fraud trial—the defense’s effort to show the alleged directives from her former boyfriend and business partner to influence her leadership at Theranos. The testimony put that relationship on center stage,...
Elizabeth Holmes jotted down reminders on hotel stationery for how to conduct herself as chief executive officer of blood-testing startup Theranos Inc.: “I speak rarely” and “I show no excitement”; also, “I do everything I say—word for word.”
The notes were presented as part of Ms. Holmes’s testimony last week in her criminal-fraud trial—the defense’s effort to show the alleged directives from her former boyfriend and business partner to influence her leadership at Theranos. The testimony put that relationship on center stage, as she aimed to turn trauma she says she sustained during their long-term romance into a linchpin of her defense.
Ms. Holmes testified that Ramesh “Sunny” Balwani had abused her emotionally and sexually over more than a decade, claims Mr. Balwani has denied. How the jury perceives her description of a complicated relationship with Mr. Balwani—and whether they believe it reduces her culpability—will likely help to determine the outcome of her long-running trial, say lawyers and trial observers.
The closely watched case has revealed intimate details of the relationship—which was kept secret from most people for years—between the top two executives at Theranos. According to text messages, Ms. Holmes’s testimony and other evidence presented in court, their partnership veered from loving endearments to dietary advice, spiritual connections and emotional and physical punishment.
Jurors have now heard parallel characterizations in Ms. Holmes’s own testimony about herself as both powerless under Mr. Balwani’s influence and in total control of a multibillion-dollar startup.
Ms. Holmes’s lawyers, in eliciting testimony from her about the relationship, didn’t dispute that she was ultimately responsible for what happened at Theranos. Defense attorney Kevin Downey asked her directly if Mr. Balwani controlled what she said to investors, journalists, board members and business partners. She said he didn’t.
When questioned by a prosecutor, Ms. Holmes said that Mr. Balwani was forthright in telling her about problems in the company’s lab and missteps in her leadership. She testified that she owned 51% of the company and had final say in the boardroom through dominant voting power.
But in her testimony she also presented herself as subservient to him, and abused by him. “He would get very angry with me and then he would sometimes come upstairs to our bedroom and he would force me to have sex with him when I didn’t want to,” she testified in court. His aggression at times left her physically injured, she testified.
Theirs was also a business relationship, and their exchanges at times reflected Mr. Balwani’s role as a mentor: “Don’t feed pasta and pesto to fish,” Mr. Balwani told Ms. Holmes in a handwritten note filled with business management advice, suggesting she learn how to properly “bait” people to motivate them.
Ms. Holmes is facing 11 counts of wire fraud and conspiracy, with the maximum penalty for each 20 years in prison. Mr. Balwani faces the same charges in a separate trial next year and has also pleaded not guilty. A lawyer for Mr. Balwani has denied all allegations of wrongdoing and called the abuse allegations by Ms. Holmes “devastating personally to him.”
Ms. Holmes’s testimony could solicit sympathy from the jury, which would help Ms. Holmes’s chance at an acquittal, said trial lawyers following the case. It also may be used to launch a defense that Ms. Holmes had a mental defect as a result of the abuse she suffered, and so she couldn’t possess the state of mind to purposefully defraud patients and investors, according to court filings. Defense lawyers haven’t made clear yet whether they will make such an argument.
A courtroom sketch of Theranos founder Elizabeth Holmes.
Photo: Vicki Behringer/Reuters
“Sympathy in a case like this is actually more important than a piece of evidence that is admissible or an argument that is appropriate,” said Andrey Spektor, a former federal prosecutor in New York and now a defense lawyer who isn’t involved in the case. “Jurors may think the right person to punish is Balwani.”
Trial lawyers say the strategy of bringing testimony that she is a victim of Mr. Balwani is also a risk for Ms. Holmes. So far, there is no evidence of the abuse beyond her allegations. Her testimony, in which she described being tormented, followed 11 weeks of prosecutors showing evidence that during her time running Theranos she was charismatic, the ultimate decision maker and had the ability to command a room.
“It’s high risk. She’s walking the tightrope,” said David M. Ring, a Los Angeles-based trial lawyer who has represented victims of sexual abuse and isn’t involved in the case. “It’s a defense of contradictions.”
The defense may call to testify a psychologist they enlisted to examine Ms. Holmes, court filings show. Such a move would likely trigger a legal argument that involves instructing jurors they may consider Ms. Holmes endured mental defects as a result of the alleged abuse that would make her incapable of the crime, lawyers said. The defense hasn’t said whether they will call the psychologist.
Some lawyers following the trial say even though Ms. Holmes has said she had knowledge about her company’s shortcomings and the power to change them, her testimony of an abusive relationship may sow doubt with the jury that a person in the depths of a traumatic relationship could have had the intention to defraud people. The prosecution’s burden is to prove intent.
Michele Hagan, a lawyer and trial consultant who has attended Ms. Holmes’s trial, said the testimony raises the question: “If she’s in a controlling, abusive relationship, can she on her own volition form an intent to defraud?”
Prosecutors tried to undermine the impact of that testimony with evidence of loving, adoring exchanges between the couple.
In the trial of Elizabeth Holmes, prosecutors have shown texts, emails and audio clips portraying her in her own words. WSJ’s Shelby Holliday asked Sara Randazzo about key pieces of evidence and what to expect. Photo: Nick Otto/AFP via Getty Images The Wall Street Journal Interactive Edition
In 2011, Mr. Balwani messaged Ms. Holmes, “Both incomplete without each other. Both meaningless without each other.” Ms. Holmes responded: “You are my twin soul,” according to a record of the messages prosecutors filed into evidence.
In court, Ms. Holmes teared up, her voice catching, as she read a series of text-message exchanges with Mr. Balwani aloud. He called her “Tigress.” She called him “Tiger.” She was his “queen”; he was her “nirvana.”
She read part of a message she sent to Mr. Balwani in 2015: “What an amazing gift to meet a man I fall madly in love with, a man who is truly great, and in falling in love he teaches me and helps me grow into who I am.”
Defense lawyers brought evidence that highlighted Mr. Balwani’s alleged emotional abuse and control that related to Ms. Holmes’s job performance as Theranos’s CEO. In handwritten notes defense lawyers showed in court, Mr. Balwani gave her directives for how to be a successful entrepreneur, since, according to Ms. Holmes, he said she didn’t have the “natural instinct” for business.
“The single most important ingredient to this secret sauce is discipline,” according to one of Mr. Balwani’s notes.
The defense argued that Ms. Holmes followed his instructions. In notes to herself written on stationery from a hotel in Singapore, Ms. Holmes created a schedule that started with awakening at 4 a.m. and meditating, and wrote out her meals for the day, as Mr. Balwani instructed her to only eat foods that “would make me pure,” according to her testimony.
Her efforts weren’t always good enough for Mr. Balwani, she testified. Ms. Holmes said she wrote notes that were based on a conversation with him, in which he allegedly told her: “I’m so sick and tired of this mediocrity you create.”
Also in these notes, as well as in dozens of text messages that were presented in court by prosecutors, Mr. Balwani pushed Ms. Holmes to rectify problems in the company’s lab, improve employee training, get regulatory approvals, tone down her claims about Theranos’s technology and focus on getting revenue and building a working product. Ms. Holmes told prosecutors that Mr. Balwani didn’t hide his views or deceive her about problems with the company.
In 2012, Mr. Balwani messaged Ms. Holmes: “You are the company.”
“Strongly agree,” she replied.
—Sara Randazzo contributed to this article.
Write to Heather Somerville at Heather.Somerville@wsj.com
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