Hedge fund honcho stole millions
A former hedge fund manager from Larkspur has been convicted in federal court in San Francisco of 22 felonies related to schemes that, according to prosecutors, included a $2.5 million investment fraud and a $550,000 credit card fraud.
James Murray, 45, the former operator of San Francisco-based Market Neutral Trading LLC, was convicted Tuesday by a jury in the court of U.S. District Judge Edward Chen after a three-week trial.
Murray was also found guilty of a 23rd count of contempt of court for obtaining a tablet computer at a time when he was forbidden Internet access, hiding it above ceiling tiles at his lawyer’s office and using it to send messages and try to activate a trading account.
Murray’s use of the hidden computer in a law firm conference room where he was left alone to work on his case occurred between August 2013 and February 2014, according to a grand jury indictment.
At the time, Murray, who was initially charged in the case in 2012, was in custody at a halfway house and was granted partial release on restrictive terms to meet with his lawyer. The restrictions included no cell phone use, no access to the Internet and no securities trading.
Murray used the tablet computer to try to activate a trading account, to contact an investor who was a witness in the case and to gain access to his ex-wife’s email, according to the indictment.
The felony counts of which Murray was convicted include 16 counts of wire fraud, four counts of money laundering and two counts of theft of the identities of the investor and his ex-wife for purposes of conducting fraudulent transactions.
The indictment said Murray used false and misleading marketing materials, including a fraudulent audit report, for the hedge fund and defrauded investors of $2.5 million in 2011 and 2012.
It said he also defrauded credit card companies of $550,000 by conducting sham credit card transactions in Market Neutral Trading’s merchant account and then obtaining fraudulent refunds.
The indictment seeks forfeiture of $3.6 million in Murray’s proceeds.
Murray will be sentenced by Chen on Jan. 20. The wire fraud counts each carry a possible maximum sentence of 20 years in prison, the money laundering charges each have a maximum of 10 years and the identity theft counts each carry a mandatory consecutive two-year sentence. There is no maximum penalty for contempt of court.
Murray was charged initially in a criminal complaint and then in a grand jury indictment that was revised four times. The final version of the indictment was issued in March and added the contempt of court charge.
Murray’s current defense lawyer was not immediately available for comment.
Murray has also been sued by the U.S. Securities and Exchange Commission in a civil lawsuit that alleges violations of securities laws.
That lawsuit, which is pending before Chen, was put on hold after Murray was criminally charged and is scheduled for a case management conference in Chen’s court on Nov. 12.