|G. Steven Burrill|
Steven Burrill has made peace with the SEC. Sued by former employees and investors, Burrill has agreed to hand over close to $6 million to cover what he stole from a biotech venture fund to cover his other business expenses or his own "lavish lifestyle," reports the commission.
According to the SEC, Burrill siphoned cash out of Burrill Life Sciences Capital Fund III "under the guise of 'advanced' management fees and spent it on family vacations to St. Barts and Paris as well as jewelry, gifts, car service, and private jets." The gifts went to both his girlfriend as well as his wife.
Based in the Bay Area, Burrill was once one of the most prominent venture players in the biotech industry, sure to gather a large crowd at his annual speech at the BIO international conference. He was both an investor in Pharmasset as well as chairman for a stint, before Gilead bought out the company for a whopping $11 billion. But in a lawsuit filed two years ago, former staffers say that Burrill had grabbed cash out of a fund which was reserved to back its earlier investments, then scrambled to hide the hole by raising new money.
Investors followed up with their own lawsuit to try and retrieve the money.
According to the SEC's litigation, Burrill's money woes dated back to 2007, when he first dipped into the $283 million Fund III to cover expenses at his management company. Over the next 7 years, such transfers became routine, including tapping the fund to top up his personal bank account. About $4.6 million was used to cover personal costs, including jewelry from Tiffany's.
"(T)hey also asked investors for more money than was needed for Fund III's follow-on investments so that they could continue to fund BCM's operations," the SEC stated. Altogether, $18 million was misappropriated.
In the settlement, in which Burrill neither admits nor denies guilt, he's handing over $4.78 million to cover what he stole from institutional investors along with $1 million in penalties. Burrill is also barred from the securities industry for life.
"Even though they are exempt from registration, venture capital advisers like Burrill have fiduciary obligations to their clients that we will enforce," said Andrew Ceresney, director of the SEC's Enforcement Division. "Burrill spent his fund's capital on whatever he pleased, and elevated his own interests above those of investors."
The SEC added that chief legal officer Victor Hebert and controller Helena Sen, both named in the lawsuits, played insider roles in the theft while getting salaries paid out of the money that was taken. Now they're handing over $185,000 and $90,000 in penalties and also agreeing to a ban from the securities industry.
"Gatekeepers play an essential role in every company," said Jina Choi, director of the SEC's San Francisco Regional Office. "Rather than take a stand for the fund's investors, Hebert and Sen allowed Burrill's scheme to perpetuate and their salaries were paid out of money Burrill misappropriated from investors."
- here's the release