Cambridge Hedge Fund Manager Arrested for Investment Fraud Scheme
BOSTON – The owner of two Cambridge-based investment advisory firms was arrested in Vermont on Saturday, May 20, 2017, in connection with a scheme to defraud hedge fund investors.
Yasuna J. Murakami, 44, of Cambridge, was charged with wire fraud in federal court in Boston. Murakami was arrested in Vermont as he crossed back into the United States from Canada. He is scheduled to appear in federal court in Boston on May 24, 2017.
Murakami was a managing member of MC2 Capital Management LLC and MC2 Canada Capital Management LLC – investment advisory firms through which Murakami established and managed three hedge funds: the MC2 Capital Partners Fund, MC2 Capital Value Fund, and MC2 Capital Canadian Opportunities Fund. It is alleged that between 2011 and 2016, Murakami fraudulently diverted millions of dollars of investor funds to business and personal accounts he controlled. He allegedly used the money to pay for lavish personal expenses such as a luxury sports car, international travel, and payments to personal credit cards and high-end department stores. According to court documents, Murakami used new investor contributions to make Ponzi scheme-like payments to earlier investors who had made redemption requests and to place investments in his own name.
As part of the fraud, it is also alleged that Murakami withheld material information regarding the management of the MC2 Canadian Opportunities Fund and provided investors with falsified account statements and tax documentation in an effort to lull them into believing their investments were safe.
In a parallel action, the Securities and Exchange Commission (SEC) announced securities fraud charges against Murakami and his hedge fund advisory firms. The SEC also filed charges against Murakami’s former business partner, Avi Chiat, in connection with the scheme. January 2017, the Massachusetts Securities Division filed civil fraud charges against Murakami for the same conduct.
The charging statute provides for a sentence of no greater than 20 years in prison, three years of supervised release, and a fine of $250,000, or twice the gross gain or loss. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
Acting United States Attorney William D. Weinreb; Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; and Joel P. Garland, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigations in Boston, made the announcement today. Jordi de Llano, Deputy Chief of Weinreb’s Economic Crimes Unit, is prosecuting the case.