Sunny Balwani's Defense in Second Theranos Trial

running the tests on. Yes, just phase one. The Dropout on Hulu is the latest recounting of the spectacular rise and fall of Elizabeth Holmes and her blood testing start up, paras with a sort of co starring role for her former boyfriend and Tharahns president Ramesh Sunny bell Wanni. The first episode premiered just in time for the start of bell Wanni's trial in the same courthouse where Holmes was convicted of de frauding investors in January and on the

same charges. Joining me is Bloomberg Legal reporter Joel Rosenblatt, who also covered the Holmes trial. This trial started about two and a half months after the conviction of Elizabeth Holmes. Was it difficult to get a jury who didn't know about that trial? Incredibly difficult. So the attorneys and the court ran into all the same problems that they had with Elizabeth Holmes in terms of the exposure to the

book and just the coverage generally. But now add the dropout this docu dropped my series, which has this only added to the exposure. So it took five or six days and a number of groups of jurors who were excused. There was a media circus for Elizabeth Holmes trial. What about Balwannies, it's greatly diminished. I mean, it's basically non existent. There are journalists covering the trial for sure, but the members of the public you don't see them. It's a

rather a quiet affair. In the opening statements, the prosecutor repeatedly started sentences with Bale and Holmes. Tell us what that indicates. The opening arguments were very much the same as they were against Elizabeth Holmes. They were streamlined, so there was a lot cleaner. The rough edges kind of weren't there. And by pairing him with Elizabeth, they're really aiming at the conspiracy theory. They were indicted as co conspirators,

so that's an important charge. But also they're just trying to pair him with everything that she did, and that's not difficult because the texts and emails, all the conversations, really all the functions of the company, and they were romantically involved. Was there a differentiation between what bal Wanni did and what Holmes did or is the prosecution just lumping them in together for everything. They're lumping them together for most things. I would say, but there is a distinction.

Sonny boy was in charge of the laboratories, so he had more exposure to two important facts. One is the bad blood results the inaccuracies of the fair Noose technology. He had more exposure to that from both just the results themselves, but also complaints from employees about the inaccuracies. He also was in charge of finances, or more in

charge of revenue projections. Elizabeth Holmes tried to blame him for that, but he did have more of a Hammond in those projections, as well as the company's relationship with Walgreens. So there are some differences, and the prosecution wills teek to kind of emphasize those areas in which Sonny Boltwani was more exposed or had a greater responsibility for what they say are the inaccuracies in the fraud. Much was

made at Holmes trial. She accused Belwanni of emotional and sexual abuse, but there won't be any mention of that at this trial. I don't think so. I mean, there's kind of one very sensational question, which is whether or not she's now cooperating with the government to reduce her sentence marginally. That would be marginally at this point, given how long she waited to cooperate, and whether she'll testify,

in which case maybe that testimony comes out. But I think the chances of her testifying are unlikely, and there's no reason she was the one who leveled those charges at him, not the government. To the government has no interest or really right to mention any of that. Do some people actually think that she will testify. Many media, of course want her to testify because it would be so great, you know, really kind of bring the whole

thing back. But there's just a lot of risks, and it's also been pointed out to me repeatedly that the government really doesn't need her for its case. The downside of the risk don't outweigh what seemed to be the risks of kind of making the trial about her Again. I don't think the government wants to do that. Elizabeth Holmes made the risky decision of taking the stand. That didn't help ultimately, but it might have helped with some of the counts against her. What about Bell Wannie, any

indication that he might take the stand as well? No, again, very unlikely. She was compelling, right, I mean, she was believable. Whether or not you actually did end up believing what she said, she at least had a chance of convincing jurors of her side of the story. And it was believable, even though maybe it doesn't sound it went there. But

he didn't have that kind of charisma. He seems uncomfortable just generally in the courtroom, in the spotlight, and it's just almost unimaginable to believe that he or his lawyers would feel that his testimony would serve his defense. It would be hard to top her magnetism, that's for sure. What did Bani's attorney reveal about the defense in his opening statement? You know, this is where this case is very interesting to me, and it stands to be completely

different from Elizabeth Holmes's trial. There's a database at Sarakos that collected the results of patient tests giant database and it was, for lack of a better word, destroyed, And Sunny Bolani and his lawyers are pointing to that database to say, the government has selected, you know, just a sliver the thinnest fraction of test results of bad test results for its case. They're gonna bring patients on saying

we got inaccurate results. But what Sonny balt Wannis lawyers are saying is that there were nine million results in this database and you didn't even bother to look at them, and so we're being unfairly impugned. There are inaccuracies at laboratories all the time, and we suffered maybe a reasonable number of inaccuracies, but you failed to look at all the great test, all the perfectly accurate results. That's a kind of fraught defense in its own way. The government

alleges that Saranos intentionally destroyed this database. So this trial looks like it's going to be headed towards a kind of trial about this database. If Sonny Baltwanna continues to go down that road, I think it's actually strategically a great choice for him. I think it gives them at least a chance. Did the defense attorney also point at

Homes as the real guilty party here. They did. They pointed out that she founded the company, she was the CEO, she was in charge of the company for years before he came on as president, and that's all accurate, and so they kind of brushed at that. They didn't go as forcefully in that direction as I had expected. As I mentioned, it looks like they're relying more on this defense based on the defunct database then pointing at her.

She suffered from the same problem as you mentioned. She pointed the finger at him, and now he's left the door open to doing that to her. But like I said, they're so paired, the text and the communications, the romantic involvements, they're just so completely tied together that it's I think very difficult for either one to extract themselves from the alleged co conspiracy. Holmes was the face of the business

and she was the darling of the media. There are all these different interviews with her, and she was on the cover of magazines, all the boasting two investors and the media. So was that all done by Holmes? Will Bell wanna get a pass on some of that? I think he doesn't get a pass on that. I mean, he just wasn't. Her testimony her trial showed that he had dressed her up and he had prepared her, and he had a strong hand in making her be that person.

But he also revealed that she enjoyed that and that was a role that she embraced and he wasn't. Yeah, he didn't make many of these public statements. He wasn't out there, uh, making these claims as publicly as she was. And I think that helps him, but not enough, not enough to absolve him. So the charges are the same, Are many of the witnesses going to be the same. Is it going to be like a rerun? It is?

It is. I think the one question is whether the patients will be different or the government will spend more time on patients who claimed that they got bad results and what the what the kind of bad effects of those bad results were, because the government spent very little time on that actually in her trial and she was absolved. She was vindicated on all the accounts of patient fraud,

all of them. So it remains to be seen whether or not the government is kind of happy just to kind of paint him with these patients, even if they don't quite connect him to the fraud against them, or if they look to shore up their case and bring in more patients or patients with kind of darker, more disturbing stories about the test results, and whether or not they choose to emphasize that part of their case more. Obviously, this isn't a retrial, but it seems a lot like

a retrial. Who do you think has the advantage, the prosecution or the defense. It's hard to say, really. I mentioned the opening arguments. The government's opening arguments were really strong because they have been through this before and they won, right, they won, so you can kind of do what you did before and if it isn't broke, then don't fix it kind of attitude. On the other hand, sunny Balhalwani got to see the whole thing before he has to go to trial, and so he knows what's coming, and

so hard to say. I think the advantage, you have to say, on balance goes to the government because of the government won the first time, so it's kind of like you've got a winning hand and Sunny Balwanni is gonna have to do something very special in order to up end that. What's happening with Holmes right now, has she filed a motion for a retrial. That's a great question, because those motions were due and the deadline came and passed, and so that, to me, you've raised a lot of questions.

She's awaiting her sentencing, which isn't until September, and that's because the judge wants to see what Sunny bans well. First of all, what happens with him, whether he's convicted or not, and either way kind of what his role was. Especially if he's convicted, he needs to figure out who was more culpable in terms of kind of meeting out their respective sentences. So he wants the information from this

trial for sentencing both of them. Whether or not that miss deeadline means that she's not going to make those filings and is cooperating is a question that I have. I don't know the answer, but she could still file an appeal. But these kind of routine motions for a retrial, like I said, came and went, and that's unusual. That's very interesting because as you say, those are usually filed after trial. Tell us about the aggravating and mitigating factors

the judge will consider in sentencing homes well. So she was the CEO, and like you said, the face of the company and also the person who was the point person for the contact with investors, and so she was really very heavily involved in deceiving investors. So that's an aggravating role. If you're seen as the person who was

really leading the fraud, that can at some time. But the biggest problem for her is the amount of money that investors were defrauded of, which if you add up accounts that she was convicted on, is a hundred and forty four million dollars. That's just an astounding sum of money in a wire fraud case. And that some of money gets her to around ten years and I think that's going to be difficult for her to get out from underneath. And so we also have these mitigating factors,

which is that she is a new mother. Her baby was born in July, I believe, and she's likely to raise that point as well as the fact that she's the first time felon the child. Though is is not legally a mitigating factor, it's something that she can raise. So depending on what the judge feels about those various

factors will determine what sentence he arrives. At but he also has to send a message to Silicon Valley, and you know this is a widely watched case, and he's going to want to I think give her some serious time, thanks, Joel.

That's Bloomberg Legal reporter Joe Rosenblatt on Maye. The c d C is lifting the asylum band known as Title forty two, which allows migrants and asylum seekers to be turned away at the border under a pandemic public health order, and three Republican states are taking the Biden administration to court over its plans to end the Trump era policy. Here's White House Press Secretary Jen Saki. This is a decision made by the CDC. It's a public health decision.

It's not one that should be wrapped up, of course in politics. Joining me is Leon Fresco, a partner at Hollandon Night. Leon. Is this purely a decision by the c d C with public health in mind? Or are there political factors at play? Well? I think there are a number of issues that the person who is none of this has been done in a vactive There's litigation in the challenging the dutility of Title forty two. That

litigation is pricing them in the district of Columbia. B'm not using it towards families, And so then the question is, is the policy works do things just for single adults? And then you start having a difficult question about, well, what is the public health reason to use it only for single adults and not for families or for kids. It's either a public health thing or it's not a

public health thing. And as other public health restrictions start to lessen across the United States, then it becomes more and more difficult to justify the use of site afforty too. There's political pressure for many Democrats in Congress to live site afforty too, and all of that in conjunction then of the CDC, who originally wasn't a big plan of using tide A forty two has to sort of be

voted into using it. Now makes it easier for the CDC sort of to return to their original position that these public health exclusions weren't necessarily the greatest idea to begin with. What the use of title for you two did, and some called it a pretext to end a asylum claims, is that it expelled people before they could make an

asylum claim. Correct, the normal law is that if anybody appears either at the port of entry or even in between the ports of entry, meaning they crossed the border illegally, the very first thing that happens is whoever encounters them has to ask them if they have a fear of being returned to the country that they take from, and if they do, they have to go through this intricate process that decides whether they can stay and make a

claim here or not. And the point of Pride of forty two is it completely short circuited that in the anxiety events, we have a public health crisis. This crisis is of such intensity that we must not even ask you any questions. We must immediately turn you back into Mexico. And that's maybe the state of affairs for about two years now in the United States, and that created this massive backlog of people seeking asylum of the Mexican border.

And we're going to wait to see how this plays out as Tide of forty two starts to uh wind down. That's my next question, because according to US Customs and Border Protection, more than one point six million migrants have been expelled under Title forty two since March of Some simply were returned to Mexico. So is there a build up of people waiting across when the policy is lifted?

According to US Customs and Border Protection, more than one point six million migrants have been expelled under Title forty two since March of Some simply were returned to Mexico. So is there a build up of people waiting across when the policy is lifted. I think there's seeing three types of individuals. First, within the one point million, there are a lot of repeat crossers who keep trying to get through and hope the title won't be applied to them.

But having said that, there's a second group, which our people coming across the border. And these are people from Ukraine, from Russia, from the Karagwa, from Cuba, from Venezuela, from Colombia, from Brazil, Katie. All kinds of places around the world are sending people to the southern border. And so there are people already there waiting in Mexico and either standing Teabrow in San Diego or Brownville or laurezell pass O.

There's people waiting all over the border. But in addition, once it becomes clearer that people will be able to come across the border, then the question is you start to see not just the people waiting there trying across, but people coming from all over the world, is right to answer. Through the southern border, the Secretary of Homeland

Security was saying that they're prepared for this. What does it take to process someone when people arrive at the border and they say they're seeking asylum, Well, it's a very kind consuming process because for the very first thing you have to do is apprehend the individual or the family.

And when they're you apprehending individual or the family, that will then depend on what kind of center their place into, whether they placed into a processing center that's holding families or a little kids, or whether they placed into one that's holding just signal adult. Then you have to take the fingerprints to make sure they're not a reduced crosser or that they actually have God forbid, some sort of criminal or terrorist record. And then once youven Tabli said send.

The question is what the government wants to do in a situation where someone doesn't have any status at all is to do what's called an expedited removal order, which is to say we will we will re transmut you back to your home country as soon as possible, but What then happens is the defense to expedited removal is that you try to do that to me, I will be persecuted based on my rage, religion, national origin, social group,

or political opinion. And here the government just has to say, well, does the person have what's called a credible fear, And a credible fear is a very very low threshold, and say we reason about possibility of think an asylum claim, and an asylum claim is considered even a one intent chance of persecution in your home country, So reasonable possibility I'm a one in contance of persecution is not a very high threshold. And in the Trump administration that got

to as low as high sevties. In the Obama and the Biden administration has been at the low nineties. So somewhere between the high seventy percent and low ninety percent of people can meet this credible fear threshold. And then the question is what happens to them? And here it's a little bit dicey because there's still a litigation going on about remain in Mexico, which means that there's a court order that some number of these people still have to be sent back to Mexico to wait to make

their asylum claims. So they've weighed in Mexico still the day of their immigration court hearing, whereas others are going to be allowed to enter the United States. And the question is, well, how is that going to be determined? And I think a lot of people will be monitoring that to see if there's either any kind of discriminatory treatment um who's getting in and who's getting out, or how many people are being forced to wait in the

remaining Mexical program. And so there's a lot of that uncertainty that's going to be surrounding this ending of prilep forts too. To get asylum in this country. It's not enough that you want a better life economically. You want to you know, better your condition. So could the standard

for credible fear be changed be made more difficult? Well, the problem is this is tasatory language from the ninety eighties that would have to be changed by Congress, and we know how difficult it is for Congress to change anything.

And the standards could have been raised. The Trump administration would have raised the standards, But the Trump administration tried to do because it couldn't raise the standards for credible fear is it tries to basically take away the two kinds of asylum claims predominantly made by Central American asylum seekers, which were for males gang related claims, and that is that if you were asked to join the gang and you refuse, you you see into what's called the social groups,

because you have to have persecution based from one of five factors. And so they were using social group to say I refused to join a gang. I'm a known entity who was used to join a gang, and so now the gang is gonna kill me, and the the government of my Central American country to do anything to solve that, and so the some administration really takes the Vietnam like that's not from the violent place, that doesn't count.

And then for winning, the primary claim was that they were going to be victims of domestic violence and that they were being persecuted on the basis of being women because the government in whatever country in Central America that they were applying from was not seriously protecting domestic violence plays. And both of those were very foreclosed by the trump of Ministrates and the Biden administrations actually working on regulations to resuscitate those plays and so if that happens, you're

likely to see more of these Central American claims. But in addition, you're seeing actual political asylum claims for people from Cuba, Nicaragua, and as Raila, Columbia, and the Ukrainians that are now coming across the border, of the Russians that are coming across the border. So even changing the same aren'thin't gonna work because there's actually quite a number of garden varieties, you know, brand backed normal asylum plays that we're starting to see on the border. So this

is really a complicated situation for the president. Let's say you pass the credible fear interview, they release you at that point into the country awaiting a court right. So this is interesting too because there's a new regulation that the Biden administration actually promulgated that said that for some people who are apprehended at the border, they would not

have to wait even for their court proceeding. They would actually get interviewed for their actual emerits asylum proceedings pretty soon after they arrived by a U. S c I s adjudicating officer, hoping that what they can do is lead out the successful claims. So most claims don't have to wait years and years and years, and also so that they don't have to make the unsuccessful claims also

have to take years and years and years. But the question is they've got to stack this thing up so that so normally what happens, you'd have an immigration for daring and now some segment of this group, and it's supposed to be, in fact, the entire segment of the group both to be everyone. So we have to wait and see how that works, stopping wise with U s c I S. But technically everybody's down supposed to go

through a U s c I S officers. And if that U s c I S officers says you've ward your asylum place you've you're supposed to get it actually very quickly now, such that the only ones that will go to immigration court are ones that have sailed in this first round asylum adjudication. Is the Biden administration prepared for this influx. They're predicting about eighteen thousand a day, up from seven thousand a day. If there are eighteen thousand a day, it's basically going to be impossible to

say you're quote unquote prepared for day. The amount of traffic, the amount of processing that's going to need to happen, while you're simultaneously trying to do a new asylum regulation, while you're tympineously trying to implement Romain in Mexico to some extent for some people, while you're simultaneously allowing Ukrainians to come across the border and you're giving them poles, all of these naked white a pytical environment for the CVP to be dealing with on the southern border, and

for people to think this is going to go smoothly is unreal listing. The question really is what is the alternative? Then you have Tydal forty two forever. And I think this is the complication because obviously the answer the one question to go. So that brings us to Republican led states are taking the Biden administration to court over these plans. What's the basis of their lawsuit? Well, they're using the traditional administrative procedure at playing, which is that there is

a change in policy. That change in policy is both arbitury and capricious and not supported by notice and comment rulemaking. Now, I don't think you would need notice and comment rulemaking to eliminate Title forty two, since you didn't necessarily need it. To implement Title forty two, you need a proclamation from the CDC. But in any case, I do think you

get the right judges. These days, it seems like people are getting rulings in these cases that you might not have predicted normally based on a just simple doctrinal analysis of the law. I could literally see a judge saying something as simple as well, how do you have mass mandates on playing and that had Title forty two. You've

got to pick one or the other. This is arbitrarian capriction and just you know, thrown away based on that and continue ordering the Biden administration to youth Title forty two. I would say in enough lawsuits that file, the odds you'll find the judge will say something like that will be incredibly high. But I do think that at some point, once there are no COVID restrictions that the federal government is operating in any area, then it will be far

easier to justify the recision of Final forty two. I do think in this world where there are mixed messages that the federal government is issuing with regards to COVID, specifically with regard to mass mandates and other things. I do think they're it becomes a little bit complicated. It's kind a clean argument why you're ending Title forty two and leon. Some of these Republican challenges to Biden administration policy have been successful, right like remain in Mexico as one.

I don't know what the others are. Well, the Republican attorney generals have been able to successfully enjoin the prosecutorial describe some guidelines that the Biden administration has don DOCTA. They've been challenging very successfully pretty much anything that's been tried to be accomplished with regards to the lessoning of

enforcement on immigration law, they're getting injunctions. Now what the end result of these injunctions are going to be as tough because they can't actually take over ICE and for its removals that doesn't want to actually remove people for but they are doing a job on the edge. Is basically saying, hey, look, whether it's pervading in Mexico, whether it's GOATA, whether it's the classecutorial dispersion of guideline, whether it's any kind of elimination of enforcement into any circumstances,

the chords are enjoining vote. Thanks for being on the show. Leon. That's Leon Fresco, a partner at Hollandon Knight. And that's it for this edition of The Bloomberg Law Show. Remember you can always get the latest legal news, Honor Bloomberg Law Podcast. You can find them on Apple Podcasts, Spotify, and at w ww dot Bloomberg dot com, slash podcast slash Law, and remember to tune into The Bloomberg Law Show every week night at ten BM Wall Street Time.

I'm June Grossow, and you're listening to Bloomberg