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Law360, San Francisco (April 9, 2020, 11:17 PM EDT) -- A California federal judge appeared skeptical Thursday of a request to release an ex-CEO while he awaits sentencing for embezzling millions from a medical device startup, despite arguments that COVID-19 poses a heightened risk to inmates, noting that "he threatened to kill the prosecutor on the case."
The government says that in late 2018 defendant Lawrence Gerrans, the ex-CEO of the startup Sanovas Inc., communicated to his brother, Chris Gerrans, a plan to "take out," or kill, Assistant U.S. Attorney Robin Harris.
Harris told U.S. District Judge Edward Chen during a telephonic hearing Thursday that Gerrans had "a clear intent to kill me," adding that "he knew where I lived" and he planned to do it after she got home from work.
But Gerrans, represented by new attorneys, said his brother isn't a reliable witness and that he only wanted Harris off his criminal case and out of Marin County politics.
His attorneys told the court that Gerrans is at "risk of death while kept in custody" due to his health, the unhygienic nature of the jail and the risk of the novel coronavirus.
But Judge Chen said he has many concerns about allowing Gerrans out of custody, saying that he can't just ignore an alleged death threat.
Letters written by Gerrans from jail show that he appears to have "a vendetta" against Harris and "paints her as part of a conspiracy" to ruin him, the judge said.
"There is clearly a focus here that frankly I find quite troubling," Judge Chen said.
Gerrans' attorney, Shawn Halbert, assured the judge that Gerrans poses no harm to Harris or the broader community, and pointed to the many letters from family and friends who vouch for him as a kind and generous person.
A California federal jury convicted Gerrans in January of money laundering and wire fraud for embezzling nearly $3 million from Sandovas and its investors, spending the funds on items including a mansion, a Maserati and a $50,000 diamond ring.
The jury found Gerrans guilty of five counts of wire fraud and three counts of making false statements to a government agency, as well as one count of engaging in monetary transactions in criminally derived property, one count of contempt of court, one count of witness tampering and one count of obstruction of justice, according to the U.S. attorney's office.
The government said that after Gerrans founded Sanovas with scientist Erhan H. Gunday, the company had successfully raised $30 million from hundreds of individual investors by 2013.
Gunday left the company in 2014 after months of disagreements with Gerrans, the company's former controller testified at trial. The controller said he was fired that year and did not believe he was replaced by anyone with accounting experience.
The government said Gerrans made his brother Chris director of engineering and had him create fake invoices showing Sanovas owed over millions of dollars to shell companies controlled by Gerrans.
Prosecutors zeroed in on Sanovas in early 2015, when Gerrans had an opportunity to buy a house he had been renting. He "looted" Sanovas of $2.57 million in order to buy the house in cash, prosecutors said in pretrial filings.
Gerrans' attorney, Halbert, told the court that Gerrans feels that he has been unjustly persecuted and that while his letters from jail do focus on Harris, it is only because he is thinking of suing her.
Halbert said that Gerrans, a father of five, should be released in light of the Covid-19 pandemic and that Gerrans had "more than learned his lesson."
"Getting convicted of a white collar crime shouldn't be a death sentence," Halbert told the judge.
But prosecutors noted in their opposition briefs that Gerrans is asking for the court to allow him to live at the house he bought with ill-gotten gains, and which is subject to forfeiture.
Attorneys for Gerrans also urged the judge not to give too much credibility to his brother, who has cooperated with the government's investigation and prosecution. They said Chris Gerrans has a "dark history," participated in the embezzlement scheme and is "scared" of going to jail himself.
But the prosecutors said they stand by Chris Gerrans' credibility and urged the court not to release Lawrence Gerrans, saying that he owns guns and that his release could be a threat to his brother's safety, Harris' safety and the safety of the community.
The government declined to comment Thursday. Representatives for Gerrans did not immediately respond to requests for comment.
The government is represented by Lloyd Farnham and Robin Harris of the U.S. Attorney's Office for the Northern District of California.
Gerrans is represented by Theresa A. Kristovich of Kabat Chapman Ozmer LLP and Shawn Halbert.
The case is U.S. v. Gerrans, case number 3:18-cr-00310, in the U.S. District Court for the Northern District of California.
--Editing by Brian Baresch.
For a reprint of this article, please contact reprints@law360.com.
