Well-known San Francisco biotech investor and UW-Madison alumnus G. Steven Burrill and his firm will pay nearly $6 million to settle charges Burrill misused investors’ money to “prop up other struggling businesses he owned and finance his lavish lifestyle,” the Securities and Exchange Commission said Wednesday.
The SEC says money Burrill funneled from the Burrill Life Sciences Capital Fund III as “advanced” management fees was actually spent on family vacations to St. Barts and Paris as well as jewelry, gifts and private jets.
“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.”
Under terms of the settlement, Burrill and his firm, Burrill Capital Management, will have to repay $4.785 million to the fund and pay a $1 million penalty. Burrill also is barred from the securities industry.
Burrill founded his own investment firm in 1994 after handling services to the life sciences industry for the Ernst & Young accounting firm for 28 years.
He has served on the boards of several dozen biotech companies and nonprofit organizations, including Third Wave Technologies, in Madison, which was purchased by Hologic, of Bedford, Massachusetts, in 2008 for $580 million.
In Wisconsin, Burrill also has served on the boards of the city of Madison’s BioAg Gateway and the Vilas County Economic Development Corp., and as an advisor to the UW College of Agriculture and Life Sciences.
In 1998, Burrill donated funds to start the UW School of Business’s G. Steven Burrill Business Plan Competition, a contest whose winners have included Madison biofuels company Virent Energy Systems and Madison online and mobile restaurant food ordering company EatStreet.
The Burrill contest held its final event in 2015.
Burrill was fired from his firm in 2014 after a lawsuit was filed against him in California state court claiming he and his colleagues received more than $19 million in unauthorized payments from the venture fund, Reuters reported.
Burrill Capital Management’s chief legal officer Victor Hebert and controller Helena Sen “played integral roles in Burrill’s scheme,” the SEC said in its news release. Hebert will have to pay a penalty of $185,000, and Sen $90,000, as part of the settlement.