By Ross Todd, From The Recorder

SAN FRANCISCO — Prominent biotech venture capitalist G. Steven Burrill has agreed to pay nearly $5.8 million to settle charges that he redirected money from one of his funds to prop up other flagging investments and to pay for his luxurious lifestyle.

The Securities and Exchange Commission alleged that Burrill withdrew more than $18 million in funds from the Burrill Life Sciences Fund III and disguised the payments as “advanced management fees.” Burrill then used money that rightfully belonged to investors to cover cash shortages in other business ventures, to pay employee salaries, to fund family trips to St. Barts and Paris, and to pay for jewelry, gifts and private jets, the agency claims.

“Burrill spent his fund’s capital on whatever he pleased, and elevated his own interests above those of investors,” said SEC enforcement chief Andrew Ceresney, in a press release.

Burrill and his firm Burrill Capital Management agreed to disgorge $4.785 million in investor money plus pay a $1 million penalty in a deal announced by the SEC Wednesday. Jan Nielsen Little of Keker & Van Nest, who represents both Burrill and the fund, didn’t respond to a phone message.

Also settling with the SEC Wednesday were Burrill Capital Management’s former chief legal officer Victor Hebert and former controller Helena Sen who agreed to pay penalties of $185,000 and $90,000 respectively to settle related charges.

The three have been embroiled in litigation over the fund’s management since 2014. Even so, Burrill was named last year as one of the 100 top biotechnology visionaries by Scientific American. The SEC claimed that Hebert agreed to call in money from fund investors while knowing it would be used to pay expenses unrelated to the fund. The SEC claimed that Burrill and Sen delayed investor payouts on at least two occasions to pay Burrill’s personal expenses as well as salaries for Hebert and Sen. The three agreed to be permanently barred from the securities industry as part of the deal, but neither admitted nor denied the agency’s claims, all regular practices in SEC settlements.

Hebert was represented by Michael Shepard of Hogan Lovells and Sen was represented by Sara Brody of Sidley Austin. Brody didn’t respond to a phone message.

Shepard said that “for more than 50 years Vic Hebert has been an imminent member of the San Francisco bar and has earned great respect of those who know him.”

Shepard called the settlement “an amicable resolution” of the investigation for Hebert.

Burrill, Hebert, and Sen still face a round of private investor suits filed in San Francisco Superior Court.

The SEC investigation is being handled by Heather Marlow and John Roscigno and supervised by Tracy Davis in the agency’s San Francisco regional office.

IMAGE:U.S. Securities and Exchange Commission building in Washington, D.C. Diego M. Radzinschi/The National Law Journal

 For more on this story go to: http://www.therecorder.com/id=1202753715125/SEC-Accuses-Biotech-VC-of-Siphoning-Funds#ixzz44UResZXO