Massachusetts Hedge Fund Manager, Defendant in SEC Action, Sentenced to Six Years' Imprisonment in Parallel Criminal Case
Litigation Release No. 24135 / May 7, 2018
Securities and Exchange Commission v. Murakami, et al., Civil Action No. 1:17-CV-10928 (D.Mass.)
A federal court in Boston has sentenced Yasuna Murakami, a former Massachusetts-based hedge fund manager, to 6 years in prison and ordered him to pay $10,520,634 in restitution for defrauding hedge fund investors. The criminal case arises from the same conduct alleged in an action the SEC filed against Murakami in 2017.
Murakami was arrested in May 2017 and later pleaded guilty to wire fraud. In connection with his plea, Murakami admitted to diverting millions of dollars of investor funds to business and personal accounts that he controlled, and using the money to pay for lavish personal expenses such as a luxury sports car, international travel, payments to personal credit cards and high-end department stores, and to place investments in his own name and make Ponzi scheme-like payments to investors who requested redemption. Murakami also admitted to withholding material information regarding the management of a hedge fund, and to providing investors with falsified account statements and tax documentation in an effort to lull them into believing that their investments were safe.
In 2017, the SEC filed an enforcement action against Murakami in federal district court in Boston. The SEC alleged that Murakami misappropriated more than $8 million for business and personal expenses and made approximately $1.3 million in Ponzi-like payments. The SEC also charged Murakami's former business partner, Avi Chiat. Chiat allegedly helped Murakami raise money from investors while providing investors with fabricated account statements that grossly overstated investment performance. The SEC charged Murakami, Chiat, and their Cambridge-based investment advisory businesses MC2 Capital Management, LLC and MC2 Canada Capital Management, LLC with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8. The SEC also charged Murakami and Chiat with aiding and abetting MC2 Capital Management, LLC's and MC2 Canada Capital Management, LLC's violations of the Investment Advisers Act. The SEC's litigation against Murakami and his co-defendants remains ongoing.
The SEC's case is being handled by Colin Forbes, Patrick Noone, David Scheffler, Marty Healey, and Celia Moore of the Boston Regional Office. The SEC appreciates the assistance of the FBI and the U.S. Attorney's Office for District of Massachusetts.