Massachusetts securities regulators have moved to bar three Cambridge-based hedge funds and their operator, Yasuna Murakami, for doing business in the state. They allege that the operation is a Ponzi scheme that has collected about $15.3 million from at least 47 investors.
“This case represents a classic example of a shell game of moving the money from one investor to another with some left over to fatten the coffers of the money manager. It is yet another example of how rogue actors use every trick in the book to entice otherwise sophisticated investors to turn over their money based on promised high returns,” said Commonwealth Secretary William Galvin, in a statement.
Galvin’s office issued an administrative complaint Wednesday in which it charges Murakami with “material misrepresentations and omissions, misappropriation of investor funds, and operation of an illegal Ponzi scheme.”
Beyond incurring losses and using new investors’ money to pay prior investors, the complaint charges Murakami with misappropriating “millions” for his personal use — including stays at luxury hotels, liquor stores, specialty cars, spending at Nordstrom and Saks Fifth Avenue, and charges with American Express.
The complaint also seeks repayment to investors for losses, the disgorgement of all profits and an administrative fine.
According to the regulatory group, Murakami started the hedge funds in 2007 with the MC2 Capital Partners Fund. He created the fund with a classmate and sold it mainly to friends and family members.
It took in more than $3.5 million but had a negative cash balance of about $2.4 million in 2008, “which resulted in a margin call that virtually wiped out the investors’ equity,” Galvin’s office says.