Founder of $283M biotech fund charged with investment fraud

Two men were indicted by a federal grand jury in San Francisco on charges related to an investment-fund of nearly $283 million in a scheme that emphasized biotech companies, according to the Dept. of Justice.

G. Steven Burrill was charged with wire fraud, investment-adviser fraud and tax evasion in connection with an alleged scheme to siphon money from an investment fund. Marc Howard Berger was charged with aiding and assisting in preparation of tax returns in which Burrill failed to report income received from the scheme.

According to the 34-count indictment, Burrill was owner and CEO of San Francisco-based Burrill & Company and related entities. Burrill allegedly managed investment funds including Burrill Life Sciences Capital Fund III, L.P., an investment fund focused on life sciences. The fund was comprised of total committed capital of nearly $283 million.

The indictment alleges that Burrill induced limited partners to contribute capital to the fund with false and misleading letters, that Burrill had the fund transfer millions of dollars in excessive management fees to companies he controlled, and that he filed false and fraudulent U.S. tax returns.

Berger is alleged to have assisted Burrill in preparing and presenting to the IRS three income-tax returns in which Burrill understated his income.

Burrill is charged with 26 counts of wire fraud, one count of investment-adviser fraud and one count of tax evasion. Berger is charged with three counts of aiding and assisting in the preparation of a false tax return.

Berger made his initial appearance in federal court in San Francisco and pleaded not guilty. Berger’s next scheduled appearance is on Oct. 3. Burrill is scheduled to make his initial appearance on Oct. 2.

If convicted, Burrill faces a statutory maximum sentence of: 20 years in prison and a fine of $250,000 or twice the gross gain for each count of wire fraud; five years in prison and a fine of $250,000 for investment-adviser fraud; and five years in prison and a $250,000 fine for tax evasion. Berger faces a statutory maximum penalty of three years in prison if convicted of aiding and assisting in preparation of a false tax return.

The Securities and Exchange Commission reported in March 2016 that Burrill agreed to settle charges that he siphoned money from a fund managed by his firm in order to finance his lavish lifestyle.

James Dunn covers, biotech, law, and banking and finance. Reach him at: james.dunn@busjrnl.com or 707-521-4257

Show Comment