PwC Auditor Faces SEC Claims Over $18M Biotech Fraud

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By Cameron Finch

Oct. 31 — A PricewaterhouseCoopers partner allegedly failed to detect a venture capital fund owner’s $18 million embezzlement, the SEC said ( In re Beamish, SEC, Admin. Proc. File No. 3-17651, 10/31/16 ).

Adrian D. Beamish failed to scrutinize illegal withdrawals that biotech venture capitalist G. Steven Burrill made from Burrill Life Sciences Capital Fund III under the guise of “advanced management fees,” the SEC said Oct. 31.

If the SEC finds Beamish liable of improper professional conduct, he could be temporarily or permanently barred from practicing before the agency.

In 2015, the fund sued its owner, saying Burrill's misconduct caused it to suffer over $30 million in investment losses. Between 2007 and 2013, Burrill allegedly used the embezzled funds to pay personal expenses and to support other business entities under the Burrill enterprise. He settled related SEC allegations in March.

Advanced Fees

According to the commission, Beamish failed to adhere to generally accepted auditing standards when he audited the fund. Despite the “significant and unusual nature” of the purported management fees, Beamish didn't look into the reason for the payments, the commission said. He also didn't inquire into why the amount of the fees continued to increase over three years, the SEC said.

Likewise, Beamish didn't take steps to verify that the payments were authorized or that transactions were properly disclosed in the fund’s financial statements, the SEC said.

Beamish was represented by Marc Fagel of Gibson, Dunn & Crutcher LLP, San Francisco.

To contact the reporter on this story: Cameron Finch in Washington at cfinch@bna.com

To contact the editor responsible for this story: Phyllis Diamond at pdiamond@bna.com

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