Two Men Charged in Northern California in Alleged Multi-Million Dollar Investment Fraud and Tax Evasion Scheme
Two men have been indicted by a federal grand jury in San Francisco on charges related to an investment fund scheme, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and the U.S. Attorney’s Office for the Northern District of California.
G. Steven Burrill is charged with wire fraud, investment adviser fraud, and tax evasion in connection with an alleged scheme to siphon money from an investment fund. Marc Howard Berger is charged with aiding and assisting in the preparation of tax returns in which Burrill failed to report income he received from the scheme.
According to the 34-count indictment, Burrill was the owner and CEO of Burrill & Company (B&C) and a number of related entities. Through the entities, Burrill allegedly managed investment funds, including Burrill Life Sciences Capital Fund III, L.P. (the “Fund”), an investment fund focused on the life sciences industry. The Fund was comprised of total committed capital of approximately $283 million, most of which, according to the indictment, was committed by limited partners. The indictment alleges that Burrill induced limited partners to contribute capital to the Fund with false and misleading letters. In addition, the indictment alleges Burrill caused the Fund to transfer millions of dollars in management fees to companies he controlled; the money was in excess of the management fees that were due and allowable under the agreements that governed the Fund. Further, the indictment alleges Burrill filed false and fraudulent U.S. Individual Income Tax Return, Forms 1040, which understated his income by excluding money Burrill transferred out of the Fund and into accounts he controlled.
Berger is alleged to have willfully assisted Burrill in preparing and presenting to the IRS three income tax returns in which Burrill understated his income.
In sum, Burrill is charged with 26 counts of wire fraud, one count of investment-adviser fraud, and one count of tax evasion. Additionally, Berger is charged with three counts of aiding and assisting in the preparation of a false tax return.
Berger was arrested this morning and made his initial appearance in federal court in San Francisco. Federal Magistrate Judge Sallie Kim arraigned Berger, who pleaded not guilty and has been released on bond. Berger’s next scheduled appearance is on Oct. 3 before the Honorable Richard Seeborg. Burrill is scheduled to make his initial appearance on Oct. 2.
If convicted, Burrill faces a statutory maximum sentence of 20 years in prison and a fine of $250,000 or twice the gross gain for each count of wire fraud; five years in prison and a fine of $250,000 for investment-adviser fraud, and five years in prison and a $250,000 fine for tax evasion. Berger faces a statutory maximum penalty of three years in prison, if convicted of aiding and assisting in the preparation of a false tax return. Additional terms of supervised release, fines, and restitution may also be imposed; however, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence.
An indictment merely alleges that crimes have been committed, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt.
Acting Deputy Assistant Attorney General Goldberg thanked special agents of the IRS Criminal Investigation and the FBI, who conducted the investigation, and Assistant U.S. Attorney Robert Leach and Trial Attorney Lori Hendrickson of the Tax Division, who are prosecuting the case. The San Francisco Regional Office of the Securities and Exchange Commission provided assistance in this matter.
Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.