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Man convicted for using family offices’ money in Facebook stock scam

Family offices lost $11 million in the Facebook stock scam
Credit: Press Association

A man who conned a family office investment adviser out of $11 million of client money for Facebook shares has been convicted of wire fraud and money laundering in a California court.

Troy Stratos, 49, convinced Tim Burns, head of ESG Family Services, that he had access to Facebook shares ahead of its 2012 IPO.

Burns, who left Morgan Stanley in 2005 to set up his company, is currently awaiting sentencing in a separate fraud case taking place in Pennsylvania.

Using the alias Ken Dennis, Stratos boasted to Burns about his connections with top executives at Facebook and within Silicon Valley, even claiming he was very close with Apple co-founder Steve Jobs.

He explained that he was purchasing stock on behalf of Carlos Slim, and there would be shares left over that he could sell on before the company’s IPO.

Burns never met Stratos, only communicating with him via phone, email and text message, but still wired money totaling $11 million on behalf of his East coast clients.

During 2011, Stratos was imprisoned following his arrest for a separate fraud involving the ex-wife of comedian Eddie Murphy, but continued his communication with Burns in text messages sent via associates.

Stratos’ defense argued he had in fact been seeking the shares on Burns behalf, and the money paid was a legitimate finder’s fee, because he had connected Burns with relevant Facebook executives.

He was found guilty on Tuesday, following a nine-day trial before a 12-person jury.

Burns is currently awaiting sentencing for embezzlement that took place between 2007 and 2012. This included using $4 million to purchase an oceanfront property in Jersey Shore.

Following this week’s convction, Stratos still faces a further trial for swindling $8 million out of Murphy’s ex-wife, Nicole Murphy, during her divorce. 

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