A Massachusetts hedge fund manager faces federal fraud charges after allegedly running an $11.2 million “Ponzi-like” scheme for personal luxuries like liquor, hotels and specialty cars, and to pay off millions in credit card debt.
Yasuna Murakami, operator of three Boston-area based hedge funds under the name MC2 Capital and MC2 Canada, was charged on Monday by the U.S. Securities and Exchange Commission in the U.S. District Court for the District of Massachusetts.
In a parallel action, the U.S. Attorney’s Office for the District of Massachusetts brought criminal wire fraud charges against Murakami in the same jurisdiction on Monday after arresting him in Vermont on Saturday.
The SEC also charged Murakani’s business partner, Avi Chiat, for allegedly helping Murakami raise money from investors while providing fabricated account statements “grossly overstating” investment performance.
The SEC alleges that Murakami and Chiat defrauded more than 50 investors in their three hedge funds. The pair raised more than $15 million, misleading investors to believe that they were investing profitably. But in reality, the pair lost more than 70 percent of the money raised from their first hedge fund in less than two years.
Between 2007 and 2016, the SEC alleges that Murakami stole $8 million of investor funds via wire transfers into accounts he controlled, while using another $1.3 million to make “Ponzi-like” payments to earlier investors as purported investment gains.
The SEC says that Murakami spent $1.8 million of the misappropriated money to pay off large balances on his personal credit card. Other funds were spent on luxury automobiles, clothing, sporting events, meals, flights and hotels.
All told, the pair caused their hedge fund investors to lose more than $11.2 million, according to the SEC.
In its action, the SEC seeks a permanent bar from the securities industry for both defendants, disgorgement of all ill-gotten gains, civil penalties and a jury trial.