Crime - Sacto 911

Santa Claus and a snow leopard – con artist trades party life for prison

The swimming pool over looks Folsom Lake at comedian Eddie Murphy’s former home in Granite Bay, Calif. Prosecutors said that after scamming $10 million from Murphy’s ex-wife, Troy Stratos convinced Nicole Murphy to refinance the mansion to generate another $3 million.
The swimming pool over looks Folsom Lake at comedian Eddie Murphy’s former home in Granite Bay, Calif. Prosecutors said that after scamming $10 million from Murphy’s ex-wife, Troy Stratos convinced Nicole Murphy to refinance the mansion to generate another $3 million. Sacramento Bee file

Troy Stratos lived a life of glamour few people could imagine.

The former Fair Oaks resident and Sacramento Country Day School alumnus had millions in his bank account and carried a European-style bag filled with $100 bills to tip valets and doormen, according to former friends.

He regularly took private jets to gambling jaunts in Las Vegas, lived in condos inside Ritz-Carltons in Boston and Los Angeles, and mused about buying the Sacramento Kings or the Golden State Warriors – with cash.

One Christmas, he threw a holiday party that featured a rented snow leopard and the same Santa Claus the Roseville Galleria used, and handed out TVs and video game consoles as gifts.

Even federal prosecutors concede Stratos is “exceptionally talented at what he does.”

“Unfortunately, what he does is steal other people’s money,” they added in documents filed this month in federal court in Sacramento. “Stratos has devoted nearly all of his adult life to defrauding individuals.”

Stratos, 50, is due to be sentenced Monday in two cases, one in which he was convicted by a jury in a Facebook stock scam in May 2015, the other in which he pleaded guilty in September to ripping off Nicole Murphy, his childhood sweetheart and the ex-wife of comedian Eddie Murphy.

Troy Stratos bilked his childhood friend Nicole Murphy out of much of her divorce settlement, telling her he would invest it and instead spending it on himself.

Prosecutors say the scope of Stratos’ cons was huge – costing victims more than $43 million over the years – and they want U.S. District Judge Troy Nunley to slap him with 30 years of prison time.

His lawyers say such a sentence is so harsh it could violate the Constitution’s guarantees against cruel and unusual punishment, and that, although Stratos is guilty of fraud, the government’s estimates of how much he should be blamed for are grossly exaggerated.

Stratos, they argue in court papers, “is remorseful for his conduct and accepts responsibility.”

But, they said, he should not face more prison time than “some of the most egregious fraudsters in the nation,” including former Enron CEO Jeffrey Skilling, who ended up with a 14-year sentence, or former WorldCom CEO Bernard Ebbers, who was sentenced to 25 years after an $11 billion loss to investors.

Instead, Sacramento attorneys Tom Johnson and Kristy Kellogg argue that Stratos deserves a nine-year sentence, one that would give him a chance at someday rebuilding his life. “He acknowledges that his need for love and acceptance and his focus on money caused his downfall,” they wrote.

His focus on money is spelled out in hundreds of pages of court documents that describe him posing as a music and television producer, boasting of Hollywood contacts and claiming he had made as much as $1 billion in AOL investments.

In reality, prosecutors say, the last time his Social Security statement showed any reportable income was in 1993, when he earned $30,249.

From then until 2005, prosecutors say, his earnings were listed each year as “0.00.”

But Stratos was hardly broke. Prosecutors say he conned millions from victims, from a grieving heiress who had just lost her mother to a crooked Philadelphia investment adviser who later would testify against him.

Employing charm and an ability to impress people with claims he knew stars such as Oprah Winfrey and Bill Cosby, Stratos moved from friendship to friendship, siphoning off millions from people as he claimed his money “was tied up in various projects,” court papers say.

As one person’s money would run out, Stratos would move on to another, drifting from Southern California to Vancouver to Boston to Florida, Assistant U.S. Attorneys Todd Pickles and Jared Dolan wrote in court filings.

In 2005, he came back home to the Sacramento region after news broke of the impending divorce of Eddie and Nicole Murphy.

The prosecutors say Stratos contacted Nicole Murphy through her divorce attorney, and that he spun a tale to his childhood friend of being a multimillionaire who would “protect her from greedy friends and relatives and help her manage her divorce proceeds.”

Stratos, who was known as Troy Stafford growing up and adopted his current name at 21, offered to invest her money overseas. She eventually transferred $10 million into an account he set up.

“Incredibly, between April and June 2006, Stratos managed to spend $9.2 million of Nicole Murphy’s cash proceeds,” prosecutors wrote.

As that money ran out, he convinced her to refinance the Granite Bay mansion she had shared with Murphy, as well as a Sacramento home where her mother lived. That generated $3 million, prosecutors say, but it wasn’t enough.

By 2007, the FBI was on Stratos’ trail, and he left the country, traveling to the Middle East and, eventually, France. Court papers say he spent a brief time in a French prison over a debt dispute, then returned to the United States in 2009.

By then, prosecutors say, Stratos’ name was becoming well known, with former acquaintances setting up websites devoted to exposing his activities.

He began using an assumed name and posed as a representative of Mexican billionaire Carlos Slim.

This led to his biggest score, one in which he stole $11.25 million from investment adviser Tim Burns by claiming to have connections to Facebook insiders.

Burns, looking to obtain Facebook stock for his clients before the company’s initial public offering, handed the money over despite the fact he had never met Stratos in person and conducted the entire negotiation by phone, email or text message. Stratos managed to string Burns along with text messages even while sitting in jail after his arrest in the Nicole Murphy case, court records say.

Burns testified against Stratos after pleading guilty to embezzlement for using $4 million in investor money to purchase an oceanfront home on the Jersey shore, according to court records. After testifying, he received a five-year prison sentence.

The money Stratos got from Burns went fast.

“Stratos used the money to return to his extravagant lifestyle,” prosecutors wrote. “He rented a $12,000-per-month condo at Marina Del Rey, California.

“He rented out suites at the Ritz Carlton in Los Angeles. He purchased expensive cars and traveled to Las Vegas, where he spent millions of dollars gambling and telling people he was scouting locations for his next great project.”

By then, however, the Nicole Murphy scam was catching up to him. In 2011, FBI agents broke down the door of his Marina Del Rey penthouse and found him hiding in the bathroom.

Stratos has been in custody ever since at the Nevada County Jail, and more recently the Sacramento County Jail, as his cases have played out.

In court papers, law enforcement officials say Stratos hasn’t changed his ways just because he’s in jail. Since his arrival at the Sacramento jail in December 2012, authorities have had to move him 32 times, “an incredibly high number of relocations,” according to a court declaration from sheriff’s Sgt. Dennis Prizmich.

Most of the moves were made because of threats from other inmates claiming Stratos “scammed them out of credits at the commissary” or refused to pay his gambling debts, Prizmich wrote.

Other problems stem from his efforts to contact prisoners who have been released “to undertake various activities on his behalf, including trying to locate experts on bitcoin,” Prizmich wrote.

“I am aware that Mr. Stratos has promised inmates to help establish and manage various careers after their release, including careers in male modeling or in the entertainment industry,” the sergeant wrote. “He has attempted to train or give instructions in custody to inmates on how to walk like a model.”

Stratos’ attorneys argue that their client is unfairly facing a 30-year sentence because prosecutors have lumped in some victims who gave Stratos money but who never sought criminal charges against him.

Prosecutors, in papers filed Wednesday, reject that argument, saying Stratos still has not accepted responsibility for what he has done.

“He has committed a seamless string of fraud offenses for nearly 20 years and conned people out of over $43 million,” they wrote. “He has been offered numerous chances in his life to correct his course and seek a law-abiding and productive life.

“Yet at each such moment he has chosen to lie, cheat and steal from his victims.”

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