Noted biotech investor G. Steven Burrill had been accused of embezzling $17 million. Now, a venture firm launched by Burrill is charging PwC with being complicit in the scheme.
|G. Steven Burrill|
A venture firm created by Burrill & Co. is suing PwC as well as G. Steven Burrill, the founder of the company bearing his last name. The plaintiff, Burrill Life Sciences Capital Fund III LP, accuses PwC for failing to bring attention to fraudulent transfers that are said to have resulted in millions of dollars in losses to investors.
The plaintiff, Burrill Life Sciences Capital Fund III LP, is also seeking a jury trial to recover damages from its former manager, G. Steven Burrill, and his alleged co-conspirators Victor Herbert, former Burrill Capital chief legal counsel, and Helena Sen, former CFO. The fund is seeking compensatory, punitive, and exemplary damages from the accused parties, which as of October 21, adds PwC to the list of defendants.
"The Burrill Defendants could not have pulled off this years-long looting campaign without the assistance of PwC, which, it turns out, was not the independent auditor it was supposed to be," the complaint states. "In reality, PwC and Burrill had been business partners." The complaint goes on to state that Burrill and PwC had an investing alliance and that internal PwC documents "make it clear that it looked the other way when confronted with evidence of the Burrill Defendants' wrongdoing."
The amended complaint, filed in County of San Francisco, refers to PwC as the fund's "watch dog," but states that the accounting firm failed to blow the whistle on a fraud scheme involving Burrill.
"PwC adhered fully to its professional obligations in conducting its audits," a PwC was quoted as saying by the Wall Street Journal."The firm will defend its work vigorously, and we are confident we will prevail at trial should the matter reach that stage."
The complaint claims that at least $17,637,759 was embezzled from 2007 to 2013. In addition, the scheme was said to have caused another $34 million in damages as the fund was unable to carry out its normal business operations, and thus could not make reap the financial benefits of investments it could have otherwise make.
The complaint singles out G. Steven Burrill as a "fraudster," who was once widely hailed as a luminary in the biotech and digital health industries, for his role in the scheme. The complaint states that throughout his career, Burrill raised some $1 billion in investment capital and, in 2008, was given the Alan Cranston "Living Legend" award.
According to court documents, Burrill "generally den[ies] the fund's allegations."
In 2014, the investors behind the fund managed to oust G. Steven Burrill from controlling it, and recruited executives at Kearny Venture Partners to manage the fund in his stead.