Rise and Fall of California's Onetime Biotech Guru Steve Burrill

Two years ago, the investment empire of California biotech maven Steve Burrill was crumbling amidst allegations of fraud and mismanagement.

Steve Burrill

Today Burrill has all but vanished from the San Francisco scene that he once dominated. He has agreed to repay nearly $5 million and pay a $1 million penalty. He has been barred by the Securities and Exchange Commission from the securities industry.

All that and more was covered by Thomas Lee of the San Francisco Chronicle in a piece Sunday about Burrill, named in 2002 as one of the world's top visionaries by Scientific American. Lee's article  ran on the front page of the California newspaper's business section.

According to the SEC, Burrill misused company funds for such things as charitable contributions, gifts for his wife and girlfriend, trips to Europe, jewelry and private jets.

Andrew Ceresney, director of the SEC’s Enforcement Division. said in a March 30 press release,

“Burrill spent his fund’s capital on whatever he pleased, and elevated his own interests above those of investors.”

Burrill was once a sought-after speaker at such events as the national BIO conference, which draws upwards of 16,000 attendees. In 2006, wearing his trademark pink ties, he presided over an international stem cell conference in San Francisco that was a bit of a celebration of California's new stem cell agency.

Lee brought to his story a fresh perspective from Minnesota, where Burrill promoted a $1 billion biotech park in a rural elk farm that involved a Woodland, Ca., real estate firm, Tower Investments.

Lee, who wrote about the proposal as a reporter in Minnesota, said that Burrill "personified the idea that (Minnesotans), too, could create an economic miracle out of nothing." Lee continued,

"Burrill did not respond to a request for comment left through his attorney or messages sent to him through LinkedIn. Public records do not list a current address or phone number. The office in the Presidio of San Francisco listed on his website is vacant, with his name off the building directory and the space up for lease. No one seems to know his current whereabouts."

Lawsuit Alleges Biotech Guru Steve Burrill Embezzled $17 Million

Steve Burrill, wn.com photo

California biotech maven Steve Burrill, once a keynote speaker at such events as the annual BIO industry conference, has been charged with embezzling more than $17 million from an investment fund bearing his name.

The lawsuit surfaced in a spate of articles this month beginning with a piece July 10 by Dawn Lim of the Wall Street Journal. She wrote,

“The lawsuit, filed on July 6 with the Superior Court of California in San Francisco, alleges that Mr. Burrill, as well as corporate entities and individuals tied to him, embezzled more than $17 million from Burrill Life Sciences Capital Fund III L.P. between late 2007 and 2013.

 “The lawsuit also claims that the improper use of the fund’s money drained it of capital to support further investments in companies it backed, causing 'more than $30 million in investment losses.'

 “Earlier this year, investors in Burrill Life Sciences Capital Fund III L.P. installed executives from San Francisco-based Kearny Venture Partners to manage the fund. A corporate entity affiliated with Kearny authorized the lawsuit."

John Carroll of Fiercebiotech wrote,

“'Burrill was also a fraudster,’ the suit goes on. ‘Shortly after his company assumed the helm of the Fund as its General Partner, he started looting the Fund's cash and diverting it to entities he wholly owned or controlled.’” 

Reports of financial irregularities surfaced a little more than a year ago when Burrill was removed from control of his fund.

Over the years, Burrill raised more than $1 billion for life sciences financing via his investment banking firm. He produced an annual state-of-the-industry study that was something of a bible.

In 2006, his firm organized an international stem cell conference that was partly a celebration of the California stem cell agency. 

None of the stories published about the latest lawsuit reported comments from Burrill or his representatives.

Here are links to other stories on the matter: San Francisco Business Times, Biospace, Biocentury and Giacor Consulting.

Burrill's Appearance Scrubbed at Big Biotech Convention

The keynote appearance this afternoon by California biotech maven Steve Burrill has been cancelled at the BIO convention in San Diego in the wake of allegations of mismanagement and inappropriate diversion of $19 million.

Ron Leuty of the San Francisco Business Times reported in a brief piece late yesterday that the 90-minute talk was scrubbed.

A lawsuit filed last month by Ann Hanham, a former managing director of Burrill & Co., said that $19 million was diverted by Burrill at the firm. The suit also said that Burrill was removed from control of a $283 million venture capital fund.

Alex Lash of Xconomy wrote, 

"A spokeswoman for the San Francisco-based financier told Xconomy that Burrill made the decision Friday and has decided to keep a low profile. Burrill has not made a statement since news of the lawsuit broke last week.

"The spokeswoman said his lawyers should file a response to the lawsuit by the end of July." 

(Editor's note: The information from Alex Lash was added after this item was originally posted.)

California Biotech Guru Steven Burrill in 'Deep Yogurt'

Steve Burrill is perhaps the leading maven on biotech in California as well as nationally. 

He has raised more than $1 billion for life sciences financing via his investment banking firm. He publishes an annual state-of-the-industry study that is something of a bible.

He is an omnipresent speaker at major biotech conferences. In 2006, his firm organized a stem cell conference that was partly a celebration of the California stem cell agency. Next week he is scheduled to be a keynote speaker at the huge BIO2014 industry conference in San Diego, which is expected to be attended by 16,000 persons.

Today, however, the Web site for his investment firm is shut down. The headlines about him on the Internet are less than pleasant. To use an expression that Burrill sometimes utters, he is in “deep yogurt.”

Nathan Vardi broke the story yesterday on Forbes. The piece was headlined 

"Steven Burrill Removed From Control Of Venture Fund For Unauthorized Payments”

Other stories used terms like “disbelief,” “fraud allegations,” “ousted” and "dumped."

Vardi’s snynopsis of the allegations said,

"G. Steven Burrill, the CEO and founder of Burrill & Co., a San Francisco financial firm specializing in biotechnology and life sciences investing, was ousted from control of a $283 million venture capital fund earlier this year by big institutional investors that cited willful or reckless misconduct related to unauthorized payments, according to documents recently filed in California State court in San Francisco." 

Alex Nash at Xconomy wrote,

“Burrill, known for his natty suits and pink shirts, is being sued for fraud by a former colleague for allegedly taking cash meant for investment and diverting it to his own 'designees and affiliates.'”

Burrill has not yet responded to requests for comments from the media covering the situation. And it is not clear whether he will still appear for his scheduled 90-minute talk next Tuesday in San Diego.

All of this involves allegations and contentions in lawsuits. But the perception is not good. Burrill himself knows the importance of perceptions. A few years back he spoke to a group at Stanford about making money in biotech and said,

 “Perceived value is more important than real value.”

 (See embedded video at the top of this article.)

And in February in comments to the Tampa Bay Business Journal about California’s success in life sciences, he said,

“Culture is a big part of it. People want to be part of a culture that tolerates failure.”

Stem Cell Argonauts To Convene in San Francisco

Since all of you out there are looking at your schedule for the coming spring, be sure to reserve a spot for The Stem Cell Meeting in San Francisco.

Produced by Burrill & Company, the two-day session promises a host of provocative discussions and a broad range of international speakers. Topics range from “Stem Cell Argonauts: Brain Circulation in a Global Economy” to
“The Un-United States: Cell Lines, Border Lines, and the Law.”

According to the preliminary agenda for the March 12-13 event, the keynote speaker will be Ian "Dolly" Wilmut of the University of Edinburgh, whose topic is “Continental Drift: Where Will Stem Cells Take Us?”

So far no speakers from CIRM are on the agenda, but are likely to be there. No speakers from WARF are listed at this point. Beth Donley, then WARF general counsel, served notice at last year's session that CIRM would have to pony up fees to Wisconsin for use of WARF ESC patents.

We caught two days of last year's session. Hundreds of others attended. It was definitely worth taking in.

Early reservations (before Jan. 26) mean a $500 cut in the $1495 registration fee. The conference also offers an academic, government and nonprofit rate of $495. If you want to get more bang for your buck, double up with the CIRM Oversight Committee meeting on March 15 and 16 in Los Angeles. That session is free.