Crime - Sacto 911

Ex-Sacramento man convicted of Facebook stock con

Nicole Murphy, left, seen in 2004 with then-husband Eddie Murphy, allegedly was robbed of $8 million by Troy Stratos, who promised to handle her financial affairs following her divorce.
Nicole Murphy, left, seen in 2004 with then-husband Eddie Murphy, allegedly was robbed of $8 million by Troy Stratos, who promised to handle her financial affairs following her divorce. Associated Press file

Troy Stratos, the self-described entertainment entrepreneur and globe-trotting businessman, was found guilty Tuesday in federal court in Sacramento of concocting an $11 million fraud involving Facebook stock.

Stratos, 49, whose taste for the high life included a $14,000-a-month Marina Del Ray condominium, exotic luxury cars and his self-described friendship with comedian Eddie Murphy’s ex-wife, was convicted of four counts of wire fraud and two of money laundering.

The eight-man, four-woman jury in U.S. District Court in Sacramento deliberated less than two hours on its verdict, which came at the conclusion of a nine-day trial before Judge Troy L. Nunley.

Stratos, who did not testify in the case and did not noticeably react to the verdict, still faces trial in the fall on charges that he swindled Nicole Murphy out of $8 million by promising to handle her financial affairs following her divorce from Eddie Murphy.

The verdict was the latest setback for Stratos, a Sacramento Country Day alumnus who allegedly continued trying to swing the Facebook deal from the Sacramento County jail following his December 2011 arrest.

Stratos’ conviction stems from what prosecutors said was a scheme to convince a Philadelphia-based investment manager that he had access to shares of Facebook stock that could be purchased before the Internet giant conducted its initial public offering.

Prosecutors say Stratos claimed to be helping Mexican billionaire Carlos Slim make a huge purchase of the stock, and that he said there were shares left over that he could sell to Philadelphia investment manager Tim Burns for Burns’ clients.

The entire deal allegedly was conducted with Stratos claiming to be a man named “Ken Dennis,” and it continued even after Stratos was arrested in the Nicole Murphy case.

Evidence at trial included testimony from Burns, whose clients lost more than $11 million. Burns pleaded guilty in federal court in 2013 to embezzlement after he spent millions for an oceanfront home on the Jersey Shore and agreed to testify against Stratos before his own sentence is determined.

During his testimony, Burns said he never met “Ken Dennis” and communicated with him only through text messages, calls and emails.

Some of those text messages were sent by Stratos associates who got their instructions by phone from him in jail, evidence showed.

“We felt the verdict was pretty easy,” said juror Eric Dye, 50, an engineer from Elk Grove. “There really wasn’t anything on the other side; we were just careful to make sure there was enough on the government’s side.

“The strongest evidence was the phone calls he made from the jail to his proxies,” Dye added. “He dictated text messages that they sent to Burns.”

After the verdict, federal Public Defender Heather Williams continued to assert Stratos’ innocence. “He was trying to find Facebook shares for Burns, and the money he received was a legitimate finder’s fee,” she said. “Now, he would like to learn from his experiences here and move forward.”

At one point, Assistant U.S. Attorney Todd Pickles played telephone conversations Burns recorded with “Ken Dennis.”

In those recordings, the man prosecutors say was actually Stratos boasted that his connections with Facebook higher-ups were so deep that he knew when co-founder Mark Zuckerberg used the bathroom.

Burns also testified that “Ken Dennis” told him he was very close to Apple co-founder Steve Jobs. When Burns phoned Dennis for an update on the Facebook deal on Oct. 5, 2011 – the day Jobs died – Dennis put him off, Burns testified.

“Today is not a good day; I’m very distraught,” Burns testified he was told.

Prosecutors contended the entire deal was a fantasy, and brought in Facebook executives to bolster their case.

Stratos next faces trial over charges that he promised Nicole Murphy he would handle her finances and invest her money in Dubai, where it could net higher returns. He also allegedly induced her to refinance the 12,600-square-foot Granite Bay mansion the Murphys once shared, and eventually he moved into it.

Instead of investing any of her money, prosecutors say, Stratos spent it on himself.

Denny Walsh: (916) 321-1189

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