July 14, 2015
By Alex Keown, BioSpace.com Breaking News Staff
SAN FRANCISCO – Noted biotech investor Steven Burrill is being sued for fraud and theft of more than $17 million by a life sciences investment fund that bears his name, the San Francisco Business Times reported Monday night.
The lawsuit, filed July 6 in San Francisco Superior Court, alleges that Burrill, along with former Burrill & Co. chief legal counsel Victor Hebert and former chief financial officer Helena Sen stole more than $17.6 million from Burrill Life Sciences Capital Fund III L.P. over a five year period end in 2013. The plaintiffs claim the alleged theft “devastated” the fund, causing more than $30 million in investment losses – losses that have yet to be stanched, the Journal noted. Fund III, the fund in question, was worth $238 million and was focused on investing in drug and diagnostics companies, according to the lawsuit. The fund was first established in 2005. According to the lawsuit, plaintiffs, who include the Treasury of the State of North Carolina, Oregon Investment Fund, Unilever, Monsanto and Celgene Corporation , allege Burrill diverted cash to business entities he controlled. The transferred monies were initially classified as advances on management fees payable by the fund to the general partners for future actions. Further, the lawsuit alleges Burrill abandoned any pretext of the funds being management fees and simply transferred the monies to entities he controlled or owned, which includes Burrill Capital LLC and Burrill Capital Management Inc. The lawsuit alleges that the fraudulent transfers were done with the knowledge of the aforementioned Hebert and Sen.
“Burrill was a fraudster,” the suit says.
Burrill was removed from control of the biotech funds.
Burrill has been advising and funding biotech companies since the founding of Cetus and Genentech , Mendelspod reported. Over the years, Burrill, who spent 28 years at accounting firm Ernst & Young, has raised more than $1 billion for the biotech industries.
This is the latest lawsuit surrounding the same investment fund. In 2014, Burrill was sued by Ann Hanham, who worked at Burrill & Co. for 13 years as a managing director of two of the biotech funds. In her lawsuit, Hanham alleged Burrill transferred about $20 million to subsidiaries he owned or controlled. Hanham was terminated by Burrill & Co. weeks after reporting problems with the fund, that lawsuit noted.
As Burrill’s woes became public, he removed himself from public appearances, including his annual “state of the industry report” at last year’s Biotechnology Industry Organization convention. The speech attracted hundreds of biotech executives, analysts and other industry watchers, the San Francisco Business Times reported last year.
Despite allegations of fraud and theft, Burrill was named one of the top 100 biotech visionaries by “Scientific American” last week. He was recognized as one of the business-minded people who “had the foresight to provide financial backing in this high-risk, nascent technology sector, along with the entrepreneurs who constructed and implemented the business principles that made those investments pay off.”
