(Adds Stratos court appearance in eighth paragraph, Paris arrest in 13th.)
Katherine Burton and Anthony Effinger
Dec. 21 (Bloomberg) -- Troy Stratos, a self-described movie producer who left a trail of debt in Europe and North America, was arrested in Los Angeles yesterday for allegedly defrauding the ex-wife of comedian Eddie Murphy of at least $7 million.
Stratos, 45, was charged with mail fraud, money laundering and obstruction of justice in a federal indictment unsealed yesterday in Sacramento, California. He’s accused of persuading Nichole Murphy, 43, to turn over more than $8 million of a divorce settlement, saying he would invest it in Dubai and the United Arab Emirates where he said he had connections and she could earn more interest.
Instead, he transferred the money into personal accounts, according to the indictment. Stratos leased a Rolls Royce and moved the staff of his movie production company into Murphy’s mansion in Granite Bay, California, near Sacramento, prosecutors said.
“I’m ecstatic that he’s going to be brought to justice,” Nicole Murphy said in a phone interview.
After taking the divorce money, Stratos persuaded Murphy to refinance houses owned by her and her mother and to take money out to pay for expenses while her nest egg was invested abroad, according to the indictment.
Stratos also allegedly told Murphy that members of Middle Eastern royal families were interested in buying her house and that she should lease luxury cars to have on the property to make it more enticing. The buyers would take the cars as part of the package, according to the charges.
In fact, Stratos lived in the house and drove the cars, and there was never any deal arranged, prosecutors said.
Stratos was scheduled to appear at a hearing today at 3 p.m. Los Angeles time where a judge will decide whether he’ll be set free on bail. If bail is denied, Stratos will be transferred to a prison in Sacramento, Lauren Horwood, a spokeswoman for the U.S. Attorney there said.
Stratos was the subject of a March profile in Bloomberg Markets, the monthly magazine of Bloomberg News. Yesterday’s indictment names the victim as “NM.” Nicole Murphy sued Stratos for fraud in federal court in California in September 2010, making the same allegations.
Erik Syverson, an attorney for Stratos at Miller Barondess LLP in Los Angeles, didn’t immediately respond to a phone message.
Until recently, Stratos had an unpaid $2.1 million civil judgment against him in Hawaii. Dennis Rush, a real estate agent in Maui, told Bloomberg News in February 2011 that Stratos had convinced him to help fund the production of a jazz CD by Nancy Wilson, who had married Stratos’s biological father.
The CD never got produced, and Rush sued. Stratos paid the judgment in November, Rush said at the time.
In August 2009, Stratos was arrested in Paris at the Radisson Blu Le Metropolitan, a luxury hotel near the Eiffel Tower, for nonpayment of 32,000 euro ($41,600) in bills at two hotels and for fraud, according to French court documents. At that time, police confiscated two black ledgers, meticulously kept by Stratos, showing loans, gifts and investments in his projects totaling just under $1 billion over the years, said Gary Peters, a Paris-based investment manager for three wealthy families who says he was hoodwinked by Stratos after being introduced to him by a member of a royal family from the Middle East.
Peters said he fronted Stratos 150,000 euros for purported emergency treatment of testicular cancer, a full-time driver and a portion of his hotel bills after Stratos told him he had been robbed of his passport and credit cards.
At the time, Stratos was going by the name David Burton, according to the documents. Peters says he called the French police after concluding that Stratos had defrauded him.
Stratos remained in a Parisian jail for six weeks, until a friend bailed him out. A French judge dropped the case on Sept. 28, 2010, saying that while Peters gave Stratos money, there wasn’t evidence that Stratos had convinced him to do so through deceit.
The law firm representing Stratos this year hired a private investigator, Bill Branscum. Branscum had previously worked for Nicole Murphy as she prepared her suit against Stratos, the investigator said earlier.
Recently, Stratos offered Peters $61,000 and told him that Branscum would meet him and give him the check, Peters said. Branscum even sent Peters a photograph of the cashier’s check drawn on an account at Preferred Bank in Torrance, California. The two men never met up. Branscum declined to comment for this story.
‘First True Love’
“I wish I’d been paid back my money and I’m sad for all parties concerned,” Peters said in a telephone interview today. “All this begs the question of where all this money is coming from.”
Stratos and Nicole Murphy met in Sacramento when they were teenagers. He once referred to her in a letter, obtained by Bloomberg Markets, as his “first true love.”
Stratos and Murphy reconnected soon after she was divorced from Eddie Murphy in August 2005. He became her financial adviser after living for a year in Vancouver, Canada, where he ran a company called Next Level Media. Later, he went to Europe, and to Egypt, where he planned to make a trilogy of films about the pharaohs.
Earlier this month, Stratos booked recording time at the Village Recorder, a studio in Los Angeles where the Rolling Stones recorded “Angie,” said Jeff Greenberg, the owner.
‘The High Road’
Like Rush, Greenberg had a judgment against Stratos. His was $50,717.98 for recording work done in several years ago. Stratos paid the judgment in recent weeks, and Greenberg agreed to let him use the studio again, if he paid first.
“I was hoping he had turned over a new leaf and had taken the high road,” Greenberg said. “He started yelling at my staff because we demanded money up front.”
The case is U.S. v. Stratos, 2:11-cr-0537, U.S. District Court, Eastern District of California (Sacramento).
--Editors: Michael Serrill, Steven Crabill, Mary Romano
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