A retired and decorated Navy chief petty officer has been indicted by the Securities and Exchange Commission (SEC) on allegations of convincing fellow sailors to give him hundreds of thousands of dollars that he then gambled away, spent on personal items, or lost on risky stock investments.
According to a statement and court filings made by federal officials, Robert Murray Jr. "used the veneer of trustworthiness created by his U.S. Navy service to raise nearly $355,000 from approximately 44 investors," of which he would misappropriate nearly half -- $148,000.
Navy records show that Murray, a corpsman, had an extensive career serving both on ships and with Marines that spanned 20 years. According to data provided by the Navy, Murray not only deployed to Iraq and Afghanistan, he also earned the Combat Action Ribbon -- an award that is earned by troops who fight an enemy combatant.
It's not clear what Murray did once he retired from the Navy in April 2018 but, in September 2020, he began to reach out to sailors and veterans about his investment fund: "Deep Dive Strategies, LLC (DDS)," prosecutors say.
Murray "touted his purported options trading acumen" in the "Goats Facebook Group" -- a collection of more than 3,500 active-duty sailors, reservists and veterans of the Navy "who shared an interest in investing," court documents allege. "Goat" refers to a common slang term for Navy chief petty officers and suggests the group was largely made up of fellow chiefs.
"Murray knew and took advantage of the trust in Navy Chiefs that is developed through service and special naval training," the SEC wrote in the criminal complaint.
Those who invested were given all the typical paperwork of any investment enterprise. Prosecutors say Murray provided his investors with documents like an "Operating Agreement" and "Disclosure Statement" that laid out rules for the fund and noted that he was entitled to an annual 2% administrative fee and 20% of any of the fund's trading profits.
However, prosecutors allege that Murray quickly began abusing the funds, spending $638.99 at Helzberg Diamonds only three days after the first investors sent their money.
Months later, in February 2021, prosecutors say Murray transferred $10,000 from the fund's bank account. "Nine minutes after making the transfer, [he] purchased $10,400 in casino chips from a Cleveland casino." There were also other instances where Murray took money from the fund "on days when he was gambling at other casinos in the states of Indiana, Wisconsin, and Ohio."
Despite the allegations of gambling and inappropriate spending, Murray did make some investments with the money entrusted to him. The court documents note that the retired chief lost most of the brokerage account's money "in GameStop options contracts" on Jan. 13, 2021 -- amid the height of the stock's meme status.
Murray made his last trade with the fund on Jan. 23, 2021. "This final failed trade was a bet on deeply risky options contracts that had the potential to lose all value within 24 hours, which they ultimately did," prosecutors said.
Still, Murray kept taking investments. "Between January 23, 2021 and February 11, 2021, Murray collected $37,300 total from three current Fund investors and one new investor," prosecutors say. But, that money never made it into any investments, they write in court documents. Instead, Murray pocketed the money.
"Murray continued using the account for personal expenses, depositing and withdrawing personal funds, until only $1 remained as of February 2022," prosecutors said.
By March, with the money gone, Murray stopped talking with investors and wouldn't let anyone see the books for the fund. "To date, no fund investors have received any return," the court documents say.
Gurbir S. Grewal, director of the SEC's Division of Enforcement, said they are "committed to protecting our nation's service members and veterans from investment fraud."
"I'm proud of our team for putting a stop to this alleged scheme and for looking out for those who have and continue to defend our country with honor," Grewal added in the statement.
The federal court in the Northern District of Ohio issued a summons to Murray on Thursday. Court records do not indicate whether he has retained a lawyer. Military.com was not able to reach Murray for a comment Friday, but the complaint notes that he had asserted his Fifth Amendment privilege against self-incrimination to the SEC.
-- Konstantin Toropin can be reached at email@example.com. Follow him on Twitter @ktoropin.