Former Hedge Fund Manager Convicted Of Wire Fraud, Money Laundering, And Contempt Of Court
SAN FRANCISCO – A jury convicted James Murray today of 22 felonies—including wire fraud, money laundering, and aggravated identity theft—and contempt of court, announced Acting U.S. Attorney Brian J. Stretch, FBI Special Agent in Charge David J. Johnson, and U.S. Secret Service Special Agent in Charge David Thomas.
Murray, 45, formerly of Larkspur, was the sole member and investment advisor of Market Neutral Trading, LLC (MNT), a purported hedge fund. MNT’s marketing materials claimed the fund was audited by Jones, Moore & Associates (JMA), a sham entity that Murray started and controlled. After being charged in a criminal complaint with wire fraud in February of 2012, Murray was charged on March 17, 2015, in a fourth superseding indictment with 22 felonies including 16 counts of wire fraud, in violation of 18 U.S.C. § 1343; 4 counts of engaging in money transactions in criminally derived property, in violation of 18 U.S.C. § 1957; 2 counts of aggravated identity theft, in violation of 18 U.S.C. § 1028A(a)(1); as well as contempt of court, in violation of 18 U.S.C. § 401(3).
According to the indictment, beginning in 2007, Murray used JMA and MNT to defraud merchant banks and investors. Among the schemes devised by Murray was a scheme involving fraudulent credit card transactions in JMA’s merchant account. Murray used credit cards he controlled to process more than $650,000 in sham transactions, followed by fraudulent refunds on those same cards, leading to a loss of more than $550,000 to the credit card processing company.
Also according to the indictment, Murray defrauded victim investors out of more than $2.5 million. Murray caused false and misleading marketing materials to be created and provided potential investors with false monthly performance numbers for the fund. For example, the materials indicated that the fund had been audited by accountants with JMA. Murray never disclosed JMA was not a real auditing firm and never disclosed that JMA did not actually conduct an audit and that the performance numbers in the JMA audit reports grossly overstated the performance of the fund in 2009. Murray also provided potential investors with a fake resume that included honors and a master’s degree he had never achieved.
Also according to the indictment, in July of 2012, Murray convinced a New York brokerage to advance 50,000 shares of stock in Netflix in order to complete a short sale stock transaction. Murray represented to the bank that at the time MNT had $5 million of assets available to invest, a fact Murray knew was not true.
Also according to the indictment, while this matter was pending, the Honorable Edward M. Chen, U.S. District Judge, issued an order setting conditions for Murray’s release on bond. According to Judge Chen’s order, Murray was prohibited from using a computer to access the Internet, prohibited from using a telephone other than at the halfway house, and prohibited from contacting witnesses. According to the indictment, Murray nevertheless obtained a computer and used it to access the Internet, sent messages to and communicated with a witness in the case, and committed additional violations of the order. The evidence at trial established that Murray used the computer at his former attorney’s office when he was released from the halfway house for the purpose of meeting with his counsel. A search conducted pursuant to a warrant revealed Murray hid the computer above ceiling tiles in a conference room in his former attorney’s office.
Today’s verdict followed a three-week jury trial and resulted in a finding by the jury that Murray was guilty of all the charges in the indictment. The maximum penalties Murray faces are as follows:
For each of the 16 counts of wire fraud, twenty years and $250,000 or two times the gross gain or loss resulting from the crime.
For each of the 4 counts of money laundering, 10 years and $250,000 or two times the amount of the criminally derived property.
For each of the 2 counts of aggravated identity theft, a two year mandatory sentence to run consecutively to the other crimes.
There is no maximum penalty for contempt of court, in violation of 18 U.S.C. § 401(3). Additional terms of supervised release, penalties and restitution may be ordered. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553. Murray is scheduled to appear for a sentencing hearing on January 20, 2016.
Assistant U.S. Attorneys Robin Harris and Lloyd Farnham are prosecuting the case with the assistance of Lillian Arauz-Haase, Maryam Beros and Jessica Meegan. The prosecution is a result of an investigation by the FBI and U.S. Secret Service.