(Bloomberg) -- Theranos Inc. founder Elizabeth Holmes and the company’s former president, Sunny Balwani, her one-time boyfriend, will have separate criminal fraud trials, a judge ruled.
In a brief order issued late Friday, U.S. District Judge Edward Davila in San Jose, California, said there is “good cause” to sever the trials, without explaining why. Holmes’s trial will start Aug. 4 as scheduled, while Balwani’s will begin after hers is finished.
Since the two former executives were charged in 2018 with orchestrating a massive fraud at the blood-testing startup that ended in its collapse, they have maintained a unified, if sometimes strained, front. Legal experts have said their past romance is probably a “complicating factor” as they try to avoid being convicted and sent to prison, and that Holmes and Balwani might choose to go separate ways and possibly even testify against each other.
Holmes and Balwani each have their own defense teams, with Holmes represented by attorneys at Williams & Connolly in Washington, and Balwani relying on ex-prosecutors at Orrick Herrington & Sutcliffe in San Francisco. Both have attended almost every hearing in their case, but they typically sit apart and don’t acknowledge each other in public.
Read More: Broken Love at Theranos May Be Tested in Criminal Fraud Case
The trials are sure to be closely watched in Silicon Valley, where Theranos was once valued at as much as $9 billion and Holmes became a darling of the media and tech community.Holmes and Balwani are accused of lying for years, claiming Theranos machines could perform myriad tests with a single drop of blood. Prosecutors alleged they duped investors out of hundreds of millions of dollars, and also defrauded doctors and patients who trusted Theranos test results.
While there are many documents in the criminal case that are sealed from public view, none of the publicly available filings lay out the defendants’ positions on having separate trials.
Holmes and Balwani were both sued by the U.S. Securities and Exchange Commission but took separate paths. Holmes settled with the agency, agreeing to pay a $500,000 fine without admiting wrongdoing. Balwani is still fighting the allegations against him.
Holmes founded Theranos in 2003. Six years later, when the company was almost out of cash, Holmes turned to Balwani -- who the SEC said was then her boyfriend -- for a $12 million line of credit. In September 2009, Balwani was appointed president and chief operating officer.
Kevin Downey and Lance Wade, lawyers representing Holmes, and Jeffrey Coopersmith and Walter Brown, lawyers representing Balwani, didn’t immediately respond to emails late Friday seeking comment.
The criminal case is U.S. v. Holmes and Balwani, 18-cr-00258, U.S. District Court, Northern District of California (San Jose). The SEC case is Securities and Exchange Commission v. Balwani, 18-cv-01603, U.S. District Court, Northern District of California (San Jose).
(Updates with defense strategies in fourth paragraph.)
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