Bay Area CEO Convicted Of Fraud And Money Laundering

SAN FRANCISCO – Lawrence J. Gerrans was convicted by a federal jury in United States District Court today of wire fraud and money laundering in connection with a scheme to defraud the medical device company he ran, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge John F. Bennett of the San Francisco Division.  The verdict issued today following a two-week trial before the Honorable Edward M. Chen, U.S. District Judge.

“The defendant siphoned millions of dollars from the medical device company he was entrusted to run, and then tried to cover up that crime,” stated U.S. Attorney Anderson.  “Insider schemes like these injure companies, employees, and investors, and undermine the public’s trust in our business community.  The investigation and prosecution of corporate fraud is a priority for our office.  Our corporate fraud strike force will continue to pursue speedy and certain justice for white collar criminals in the Bay Area and throughout the Northern District of California.”

The jury found Gerrans, 49, of San Anselmo, Calif., guilty on five counts of wire fraud, in violation of 18 U.S.C. § 1343; one count of engaging in monetary transactions in criminally derived property, in violation of 18 U.S.C. § 1957; three counts of making false statements to a government agency, in violation of 18 U.S.C. § 1001(3); one count of contempt of court, in violation of 18 U.S.C. § 401(3); one count of witness tampering, in violation of 18 U.S.C. § 1512(b)(1); and one count of obstruction of justice, in violation of 18 U.S.C. § 1503.

Evidence at trial showed that Gerrans, the president and chief executive officer of San Rafael-based medical device company Sanovas, employed a number of fraudulent methods to siphon funds out of Sanovas.  From January 12, 2015, through March 16, 2015, Gerrans systematically transferred more than $2.6 million from Sanovas to himself and two shell companies he controlled, Halo Management Group and Hartford Legend Capital Enterprises.  That money was then used for an all-cash purchase of a luxury home in San Anselmo, at a purchase price of $2,570,000.  At least $2.3 million of this money was laundered through Hartford Legend before being paid to the escrow account to purchase the house.  

Evidence at trial also showed that Gerrans made false statements to a newly-created board of directors to seek their approval for a lucrative compensation plan and for reimbursement of retirement account funds that Gerrans had liquidated in 2013 and 2014.  Evidence at trial showed that Gerrans had used the retirement account funds for personal expenditures, including a Maserati, a diamond ring, and rent on his personal residence, but he told the board of directors he had used the retirement account funds to benefit Sanovas.  In another part of the scheme to defraud, evidence also showed that in 2017 Gerrans used a Sanovas corporate credit card for lavish personal expenditures, including a $44,000 vacation timeshare, $12,500 for high-end carpets for his home, and $32,000 to pay the property taxes on his personal residence.  

Evidence at trial further showed that Gerrans provided false documents to the FBI during the criminal investigation, and that after he was first charged in the case he violated a court-ordered bond condition, attempted to tamper with a witness, and obstructed justice.

A federal grand jury indicted Gerrans on August 27, 2019, by a second superseding indictment, charging him with five counts of wire fraud, in violation of 18 U.S.C. § 1343; one count of engaging in monetary transactions in criminally derived property, in violation of 18 U.S.C. § 1957; three counts of making false statements to a government agency, in violation of 18 U.S.C. § 1001(3); one count of contempt of court, in violation of 18 U.S.C. § 401(3); one count of witness tampering, in violation of 18 U.S.C. § 1512(b)(1); and one count of obstruction of justice, in violation of 18 U.S.C. § 1503.  The jury convicted Gerrans on all counts.  

Judge Chen scheduled the defendant’s sentencing hearing for May 20, 2020.

Gerrans faces maximum statutory penalties of twenty years imprisonment and a $250,000 fine, plus restitution, for each violation of 18 U.S.C. § 1343; ten years imprisonment and a $250,000 fine or twice the amount of the criminally derived property, for each violation of 18 U.S.C. § 1957; five years imprisonment and a $250,000 fine, for each violation of 18 U.S.C. § 1001(3); twenty years of imprisonment and a $250,000 fine, for each violation of 18 U.S.C. § 1512(b)(1); ten years of imprisonment and a $250,000 fine, for each violation of 18 U.S.C. § 1503; and a term of imprisonment to be determined by the court and a $250,000 fine, for each violation of 18 U.S.C. § 401(3).  However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553. 

Assistant U.S. Attorneys Robin Harris and Lloyd Farnham are prosecuting the case with the assistance of Patricia Mahoney, Kimberly Richardson, and Phillip Villanueva.  The prosecution is the result of an investigation by the Federal Bureau of Investigation.