Alleged Fraud Scheme and Misrepresentation
According to a 23-count indictment issued by a federal grand jury in September 2022, Justin Murphy is accused of deceiving investors in Mara Investment Group, which was also known as Mara Investment Management LP and Mara Investments Global Management LLC. The indictment alleges that Murphy misrepresented the firm as a legitimate hedge fund that utilized a "quantitative strategy" to balance long and short positions in securities.
Between 2016 and September 2022, Murphy is said to have employed a much riskier investment strategy than initially disclosed to investors. Authorities claim that instead of following the promised strategy, Murphy misappropriated significant amounts of investor funds for his personal use. Additionally, he allegedly provided false account statements and tax documents, misleading investors about their returns and resulting in tax liabilities for them.
Embezzlement of $3.5 Million
The indictment claims that Murphy embezzled approximately $3.5 million, which he then used for personal expenditures. Federal authorities also allege that Murphy invested part of the embezzled funds in a startup company owned by a relative. These actions were part of a broader scheme to deceive investors, authorities say, while enriching himself under the guise of hedge fund management.
The charges against Murphy include 15 counts of wire fraud, each carrying a potential maximum sentence of 20 years in prison; five counts of money laundering, with a maximum sentence of 10 years per count; and three counts of tax evasion, which could carry sentences of up to five years per count.
Extradition and Court Proceedings
Murphy was apprehended in Brazil in December 2023 after an international manhunt. Following his arrest, he remained in custody until he was released on a $250,000 bond after his court appearance in Connecticut last week. As part of his extradition agreement, federal authorities decided not to pursue the tax evasion charges against Murphy, focusing instead on the wire fraud and money laundering allegations.
Murphy’s legal team has entered a plea of not guilty on his behalf, and he is expected to face trial on the charges in the coming months. His case has drawn attention due to the significant amounts of money involved and the international nature of his arrest.
If convicted on all counts, Murphy could face decades in prison. Wire fraud charges carry severe penalties, and the money laundering allegations could further extend his potential sentence.
