Once-prominent biotech investor Stephen Burrill is barred from the securities industry and will pay nearly $6 million to settle SEC charges that he looted investment funds to cover losses in other businesses and pay for his lavish lifestyle.
Burrill and his firm Burrill Capital Management agreed to disgorge the $4.785 million prosecutors said Burrill siphoned off for personal use, plus a $1 million fine. The firm’s former chief legal officer, Victor Hebert, and former controller Helena Sen agreed to pay $185,000 and $90,000 civil fines, respectively. They are also barred from the securities industry, the SEC said.
The scandal began in 2013, when the fund’s managers allegedly discovered that Burrill, Hebert and Sen misappropriated some $18 million from the fund, according to a lawsuit filed in a California state court in 2014. Burrill resisted the board’s pressure to step down, but was officially ousted March 20, according to the lawsuit.
“Burrill spent his fund’s capital on whatever he pleased, and elevated his own interests above those of investors,” SEC enforcement chief Andrew Ceresney said. “Even though they are exempt from registration, venture capital advisers like Burrill have fiduciary obligations to their clients.”
Lawyers for Burrill and Sen did not immediately respond to requests for comment.
Michael Shepard, a lawyer for Hebert, said his client has been a lawyer for more than 50 years, and settled to put the investigation behind him.
Material from Reuters was used in this report.