Former Bainbridge resident, CEO accused of defrauding investors of more than $10M
The former CEO of a medical startup, once a resident of Bainbridge Island, has been charged in U.S. District Court with ten counts of wire fraud after allegedly defrauding more than 200 investors of more than $10 million through misrepresentations about the company, according to the Department of Justice.
Stephen Baird, 67, identified by the DOJ as the former CEO of S-Ray Incorporated, was indicted by a federal grand jury on the charges Wednesday. Baird is scheduled to make a court appearance Feb. 16 in Seattle.
“Mr. Baird is charged with defrauding investors for over a decade, falsely claiming that his company was on the cusp of making millions of dollars by selling a product that, in fact, never existed,” U.S. Attorney Nick Brown said in a statement. “Instead of developing the device, he is charged with secretly diverting investor funds to his own personal use, such as a private residence and a luxury car. It’s time to hold Mr. Baird accountable.”
Baird’s last known address was in Terrebonne, Oregon, a Department of Justice spokeswoman said. At times, the company had offices in Seattle and Redmond, as well as in Portland, Oregon, and Huntington Beach, California, according to court documents.
Baird represented to investors that S-Ray had developed two devices that used ultrasound technology for dental imaging and said that the products were capable of replacing traditional X-ray technology in the dental space, according to charging documents, which said that he represented that the technology would generate higher quality images without exposing patients to X-ray radiation.
Five of the counts relate to emails sent to investors in 2017 and 2018, and the other five relate to deposits made by investors into the company's Kitsap Bank account in 2019 and 2020, according to the DOJ.
“S-Ray never developed a product or prototype that was effective for any dental application,” court documents said. “While S-Ray engaged in some product development, the efforts were unsuccessful, in part because Baird diverted corporate funds to his own personal use instead of using them for product development or other corporate uses.”
In total, investors paid at least $10.75 million to purchase company stock between May 2012 and March 2021, and Baird used only about $4 million for business purposes, according to charging documents, which said that the remaining $6.7 million was used for Baird’s own purposes or moved to affiliate companies or family members.
Court documents allege that in 2015, Baird transferred a total of $1.7 million in company funds to the group Island Family Limited Partnership and then used about $1.65 million of that money to buy a personal residence on Bainbridge Island.
Island Family Limited Partnership purchased a property on the water on north end of Bainbridge Island in 2015 for about $1.7 million, according to Kitsap County property records. The property was then sold by the partnership in 2019 for $1.78 million.
When the partnership was formed in Washington in 2013, it listed an address on Parfitt Way on Bainbridge Island, according to documents filed with the Secretary of State’s Office. The organization, which most recently listed an address in Vancouver, Washington, now has a status listed as delinquent, having not filed an annual report with the state.
This article originally appeared on Kitsap Sun: Former Bainbridge resident, CEO charged with ten counts of wire fraud
