CEO Of Bay Area Medical Device Company Indicted For Alleged Fraud And Money Laundering
Indictment Alleges Defendant Illegally Funneled Money From Company To Purchase $2 Million Home
SAN FRANCISCO – A federal grand jury indicted Lawrence J. Gerrans, president and chief executive officer of San Rafael-based medical device company Sanovas, on three counts of wire fraud and money laundering, announced Acting United States Attorney Alex G. Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The indictment describes a number of schemes allegedly employed by Gerrans to obtain money from Sanovas in order to pay cash for a home and a myriad of personal expenses.
According to the indictment filed yesterday, between April of 2013 until at least May of 2015 Gerrans employed a number of fraudulent methods to syphon funds out of Sanovas. In one part of the scheme, between April of 2013 and May of 2014, Gerrans allegedly withdrew a total of $500,000 from his personal Individual Retirement Account and then used the funds to pay for personal expenses including vacations, jewelry, and spa treatments. Then, in March of 2015 after a newly constituted board of directors was convened at Sanovas, Gerrans claimed he used the IRA funds for Sanovas’s business and requested reimbursement for the liquidated IRA. Gerrans argued to the new board of directors that he should be reimbursed for the funds as deferred compensation.
The indictment describes another part of the scheme in which Gerrans allegedly orchestrated the payment of bogus consulting fees to a separate company that Gerrans owned. The indictment alleges that, in addition to being president and CEO of Sanovas, Gerrans was the sole owner of Halo Management Group, LLC, a company with its principal place of business in the home in San Anselmo where Gerrans resided. Gerrans allegedly caused invoices to be submitted by Halo to Sanovas even though Halo was not a legitimate independent consulting firm and provided no independent services to Sanovas. Moreover, the indictment alleges Gerrans directed an employee to create after-the-fact accounting entries for consulting and professional services that Halo never actually provided to Sanovas.
Another part of the scheme described in the indictment involves Gerrans’s purchase of a personal residence in San Anselmo, Calif., for $2,570,000. According to the indictment, Gerrans created a shell company, Hartford Legend Capital Enterprises, with its principal place of business in Reno, Nevada. The indictment alleges Gerrans used the company to receive money from Sanovas and Halo in order to facilitate the purchase of the San Anselmo home. In addition, Gerrans orchestrated the payments to Hartford without the knowledge or approval of the Sanovas board of directors.
In sum, the indictment charges Gerrans with three counts of wire fraud, in violation of 18 U.S.C. § 1343, and one count of money laundering, in violation of 18 U.S.C. § 1957. Gerrans is scheduled to make his initial federal court appearance regarding the charges on July 29, 2018, before United States Magistrate Judge Sallie Kim.
An indictment merely alleges that crimes have been committed, and Gerrans, like all defendants, is presumed innocent until proven guilty beyond a reasonable doubt. If convicted of the wire fraud counts, Gerrans faces a maximum statutory sentence of 20 years in prison and a fine in the amount of the greater of $250,000 or twice the gain or loss resulting from the wire fraud scheme. In addition, if convicted of money laundering, the defendant faces a maximum statutory sentence of 10 years in prison and a fine in the amount of the greater of $250,000 or twice the amount of the criminally derived property. The court also may order an additional term of supervised release, fines or other assessments, and restitution, if appropriate. 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, 18 U.S.C. § 3553.
Assistant U.S. Attorney Robin Harris is prosecuting the case with assistance from Bridget Kilkenny. This prosecution is the result of an investigation by the Federal Bureau of Investigation.