The Securities and Exchange Commission (SEC) has charged Justin Murphy, a former resident of Greenwich, Connecticut, and his investment management company Mara Investments, LLC, with fraudulently misappropriating approximately $3.4 million in investor assets.
According to the SEC complaint, Justin Murphy induced several individuals to invest approximately $6.6 million in a private equity fund, Mara Investment Management LP controlled by Mara Investments.
Murphy told prospective investors that he was trading conservative stocks in the Fund’s brokerage accounts and generating consistent profits. The complaint alleges that, contrary to his statements, Murphy ultimately used nearly all of the investors’ money for unauthorized business and personal expenses and to fund a company owned by a relative.
The complaint also alleges that when depleted assets in the Fund’s brokerage account failed to produce consistent profits, Murphy concealed and furthered the fraud by providing his investors with falsified account statements and inaccurate tax documents showing profitable trades.
The SEC’s complaint, filed in the U.S. District Court for the District of Connecticut, accuses Murphy and Mara Investments of violating the anti-fraud provisions of Section 17(a) of the Securities Act of 1933, Section 10( b) of the Securities Exchange. Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rules 206(4)-8 thereunder.
The SEC is seeking permanent injunctions, disqualification with prejudice and civil penalties against Murphy and Mara Investments.