A federal grand jury has indicted the CEO and president of San Rafael-based medical device company Sanovas, Inc. on three counts of money laundering and wire fraud.
Lawrence J. Gerrans, 47, is accused of using a number of schemes to siphon money from his company to purchase a home and pay for other personal expenses, according to an announcement of the charges by the U.S. Department of Justice's Northern California office. If convicted, he faces a maximum sentence of 20 years.
Gerrans co-founded Sanovas, a life science company that specializes in producing minimally invasive medical imaging devices to treat lung cancer. Last year Silicon Review named the company — started in 2009 and holder of more than 100 patents — one of the 10 fastest-growing health companies.
Between April 2013 and May 2014, Gerrans allegedly withdrew $500,000 from his personal individual retirement account to pay for jewelry, vacations and spa treatment. In March 2015 he claimed the funds were used for Sanovas business activities and requested a reimbursement for the liquidated funds as deferred compensation, according to the U.S. Attorney’s Office.
Gerrans is also accused of submitting payment of bogus consulting fees to a separate company he owned, Halo Management Group, LLC. He caused invoices to be submitted by Halo to Sanovas, even though Halo was not a legitimate independent consulting firm and provided no independent services to Sanovas, according to the statement. An employee allegedly was directed by Gerrans to create after-the-fact accounting entries for consulting and professional services that Halo never actually provided to Sanovas.
Gerrans also used fraudulent methods to purchase his personal residence in San Anselmo for $2.57 million, according to the indictment. Gerrans created a shell company, Hartford Legend Capital Enterprises, and used the company to receive money from Sanovas and Halo to facilitate the purchase of his home.
Payments by Gerrans to Hartford were made without the knowledge or approval of the Sanovas board of directors, according to the statement.
Gerrans is set for his first court appearance on these charges on July 25 before Judge Maria-Elena James in San Francisco.
Sanovas did not immediately respond to two phone call inquiries about the indictment on Monday.