An arrest warrant was issued Oct. 25 for a former Bainbridge Island man wanted in connection with defrauding 200 investors of $10.75 million.
Stephen Baird, 69, the former chief executive officer of S-Ray, Inc., failed to show up for sentencing in U.S. District Court in Seattle, a U.S. Attorney’s Office news release says.
U.S. Attorney Tessa M. Gorman said Baird defrauded investors by making false statements about S-Ray’s product development and falsely claiming the company had obtained Food and Drug Administration authorization to market a dental device.
Baird was indicted in February 2023 and pleaded guilty last May. His failure to appear means he may face additional prison time for violating his appearance bond. Judge Richard A. Jones issued a warrant for his arrest.
Anyone who knows anything about Baird’s location is asked to call the FBI at 206-622-0460 and ask for the duty agent.
Baird’s scheme began in 2012. Baird told investors their funds would be used to bring a product to market, but he instead used some $5.7 million – for his and his family’s personal expenses, including to purchase a luxury car and a BI waterfront house.
Many of the investors were in court Friday, ready to speak about the web of lies Baird told them. Some lost their retirement savings, the college tuitions for their children and grandchildren, and for one 94-year-old investor the loss means choosing between medications and other daily needs, the release from the Western District of Washington says.
The U.S. Attorney’s Office is seeking forfeiture of a ranch in Terrebonne, OR that Baird purchased using proceeds of the fraud.
Baird claimed S-Ray had developed an innovative ultrasound device that could take the place of X-rays, allowing dentists to quickly and safely image patients’ mouths. Baird falsely told investors that the FDA had granted S-Ray “market clearance” to sell the device.
At a court hearing in May, Baird admitted to engaging in a scheme to defraud S-Ray’s investors in connection with his promotion and sale of S-Ray stock. Under a plea agreement, Baird agreed to pay restitution to investors and to forfeit property in amounts to be determined by the court. The government agreed to recommend no more than seven years in prison.
The Securities and Exchange Commission filed a civil securities fraud action against Baird and S-Ray in March 2022. On January 6, 2023, a judge issued an order that imposed civil penalties against Baird and S-Ray. The SEC complaint adds Baird had told investors he would not take a salary that was $400,000 a year.
In February of last year, U.S. Attorney Nick Brown said, “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.”
In examples of his spending, court papers say in 2014 Baird made a check for $100,000 for lab equipment for a business entity under his control. Eight days later he bought a luxury car. In 2015 he transferred $1.7 million to Island Family Ltd. Partnership. About $1.65 million was spent to buy a home on BI.
By December 2017, Baird had terminated almost all of S-Ray’s employees. By April 2019, the last remaining employee left the company. Despite that Baird told investors as late as 2020 that the company was worth $400 million. Baird continued to solicit investments – primarily from dentists and orthodontists – until March 2021.
By the end of 2021, S-Ray had only $13,000 in its corporate account.
