Press Release

One-time Bainbridge Island resident falsely claimed company product achieved FDA market clearance

Seattle - Stephen Baird, the former CEO of S-Ray, Inc., pleaded guilty today in U.S. District Court in Seattle to wire fraud, announced U.S. Attorney Tessa M. Gorman. Baird, 68, formerly of Bainbridge Island, Washington, defrauded investors by making false statements about S-Ray's product development and falsely claiming the company had obtained FDA authorization to market a dental device. Baird is scheduled for sentencing by U.S. District Judge Richard A. Jones on August 2, 2024.

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 Food and Drug Administration (FDA) had granted S-Ray "market clearance" to sell the device when, in fact, S-Ray never obtained FDA authorization to sell any device.

At a court hearing today, Baird admitted to engaging in a scheme to defraud S-Ray's investors in connection with his promotion and sale of S-Ray stock. The Court will determine at a future hearing the amount of loss investors sustained and other facts relating to Baird's fraudulent scheme.

Charging documents allege Baird's scheme began in 2012 and defrauded some 200 investors of $10.75 million. The documents allege Baird told investors their funds would be used to bring a product to market, but Baird instead used at least 62% of the money - some $6.7 million - for his and his family's personal expenses, including to purchase a luxury car and a house on Bainbridge Island.

Under the 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, the Honorable John H. 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 and from participating in certain types of securities transactions.

The case is being investigated by the FBI. The case is being prosecuted by Assistant United States Attorney Seth Wilkinson and Special Assistant United States Attorney Jessica M. Ly.

Contact

Updated May 8, 2024