Stephen Baird, the former CEO of S-Ray, Inc., was indicted Feb. 8 by a federal grand jury for 10 counts of wire fraud, U.S. attorney Nick Brown said.
Between 2012-21, Baird, 67, formerly of Bainbridge Island, allegedly defrauded over 200 investors of more than $10.7 million by making false statements to them. Baird is scheduled to be arraigned Feb. 16.
Wire fraud is punishable by up to 20 years in prison.
“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,” Brown said. “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.”
In a news release the Department of Justice says:
Over many years, Baird claimed S-Ray had developed an innovative ultrasound device that would take the place of X-rays, allowing dentists to quickly and safely image patients’ mouths. Baird told investors the device delivered “astonishing results” and that the FDA had granted the company “market clearance” to sell the device. But S-Ray never developed any such product; was never close to offering one for sale; and never received FDA authorization.
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.
At least 62% of the money – some $6.7 million – was used for Baird’s personal expenses. By the end of 2021, S-Ray had only $13,000 in its corporate account.
Five of the counts of wire fraud are for emails sent or approved by Baird that were sent to investors. The other five counts relate to deposits of investment funds.
The Securities and Exchange Commission filed a civil securities fraud action against Baird and S-Ray in March, 2022. On Jan. 6, 2023, the judge John Chun issued an order that imposed civil penalties against Baird and S-Ray, held them liable for disgorgement of investment funds, and enjoined Baird from serving as an officer or director of certain companies, or from participating in certain types of securities transactions.