Massachusetts securities regulators allege that three hedge funds in Cambridge are operating a Ponzi scheme that has cost investors more than $15 million in losses.
Ponzi Scheme Fraud
A recent Massachusetts hedge fund Ponzi scheme has collected approximately $15.3 million from at least 47 investors. Three Cambridge-based hedge funds and their manager, Yasuna Murakami, have been barred by regulators from doing further securities business in Massachusetts. A Boston federal court has sentenced Murakami to six years in prison and ordered him to pay $10,520,634 in restitution for defrauding hedge fund investors.
Yasuna Murakami has a 10-year history of hedge fund fraud dating back to 2007 when he established MC2 Capital Partners Fund. The fund was sold to friends and family members who invested over $3.5 million and lost most of their investments. In 2008, Murakami started a second hedge fund, MC2 Capital Value Partners Fund, which showed net losses for the first three years. In 2009, Murakami launched the MC2 Capital Canadian Opportunities Fund in Toronto with a well-known partner, Donville Kent Asset Management. Securities regulators say the association with Donville Kent encouraged many investors to invest in the fund, including a Boston institutional investor who invested $2 million. According to the report, Murakami used funds collected from investors through the Canadian Fund to pay Value Fund and Partners Fund investors their promised returns.
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In 2017, Murakami was arrested and charged with investment fraud. He admitted to spending millions of dollars of investor funds on things that promoted his personal lavish lifestyle. He purchased a luxury sports car, designer clothing and expensive jewelry, air travel to international destinations, expensive hotel rooms at five-star hotels, and luxurious accommodations for his home. He took money from investors and placed investments in his own name, then made Ponzi scheme payments to investors. In court, Murakami admitted to withholding important hedge fund information and providing false information to investors, so they would think their investments were safe.
In the 2017 arrest, the SEC alleged that Murakami cost investors more than $8 million in losses by spending funds on his personal expenses. They also alleged that over $1.3 was spent in Ponzi scheme payments. Avi Chiat, Murakami’s former business partner, was also charged for allegedly raising money from investors by providing them with falsified account statements that showed inflated investment performance.
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Recovering Losses Caused by Investment Misconduct.