The U.S. Securities and Exchange Commission has charged a retired Navy chief with fraud over allegations that he took nearly $355,000 in investment funds from dozens of sailors, reservists and veterans who were part of a chief Facebook group and spent nearly half the money on gambling and personal expenses, the agency announced Thursday.
Robert L. Murray Jr., 42, stood up Deep Dive Strategies LLC, or DDS, in September 2020, collecting and misspending funds as part of an alleged crime that lasted until January, according to the criminal complaint.
Navy officials confirmed Thursday that Murray was a chief hospital corpsman who retired in 2018 after 20 years of service.
“As a retired Navy Chief, Murray knew and took advantage of the trust in Navy Chiefs that is developed through service and special naval training,” the SEC’s complaint states. “Murray used the veneer of trustworthiness created by his U.S. Navy service to raise nearly $355,000 from approximately 44 investors—most of whom also were affiliated with the Navy.”
But instead of shepherding the sailors’ cash, Murray is accused of misappropriating about $148,000 from the fund, spending it on gambling and personal expenses.
He blew $8,700 in shipmate money via debit card and check expenditures, $83,500 in cash withdrawals and $638.99 at Helzberg Diamonds, according to the complaint.
In February 2021, prosecutors allege, he transferred $10,000 from the fund to his personal bank account, which had less than $800 in it before the transfer.
“Nine minutes after making the transfer, Murray purchased $10,400 in casino chips from a Cleveland casino using the same personal bank account,” the complaint alleges.
The complaint also indicates the retired chief and his fund weren’t the soundest options for shipmates looking to invest.
Murray lost “a significant amount” of the brokerage account’s value in January 2021 by investing in GameStop options contracts, according to the complaint.
The so-called “stonk” phenomenon involving the brick-and-mortar GameStop chain came to the fore last year, when amateur day traders united to push the company’s stock value through the roof before it crashed back down to earth.
“Murray’s foray into trading securities for the Fund was brief and unsuccessful,” the complaint states.
The retired chief made his last DDS trade on Jan. 23, 2021, but the complaint doesn’t indicate whether that was the GameStop foray.
“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,” the complaint states. “The DDS brokerage account was left with $161.98, which Murray later withdrew on February 4, 2021. In under a month, Murray lost almost all the Fund’s money he used to trade securities.”
Murray could not be reached for comment Thursday, but “asserted his Fifth Amendment privilege during the SEC’s pre-filing investigation,” the complaint states.
The complaint alleges that Murray used the “Goats Facebook Group” to tout his “purported successes in trading options contracts” to group members.
He sold units of DDS membership interests to investors at $5,000 a unit.
“Murray also created a channel on the Discord social media platform, where he live-streamed his trading activity and posted trading advice with a focus on options trading,” the complaint states.
Murray started the fund in September 2020 and solicited investors through February 2021.
“He told investors that their money would be placed in the Fund and used to invest in publicly-traded securities,” the complaint alleges.
While Murray told investors they could request a redemption of their fund investment at the end of 2021, the retired chief “almost immediately” began spending the fund’s money on personal expenses.
Murray cut off contact with investors by March 2021 and “rebuffed their attempts to view an accounting of the Fund,” the complaint alleges.
In the following months, some investors requested a refund, and Murray indicated in August 2021 that he would return what was left in the fund, but never did, according to the complaint.
“To date, no Fund investors have received any return from the Fund,” the complaint states.
Murray currently resides in Anchorage, Alaska, but was living in Chicago and Ohio during his alleged crimes.
SEC officials said Thursday that no one else has been charged.
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