Fitbit Fraud: Virginia Man Charged in $100M Scheme

MANHATTAN, NY – A Virginia man is facing federal charges after allegedly orchestrating a brazen $100 million manipulation of Fitbit stock through a fictitious tender offer. ROBERT WALTER MURRAY, was arrested and charged with securities and wire fraud in Manhattan federal court, authorities announced today. The scheme involved filing a fake bid to buy all outstanding Fitbit shares, temporarily inflating the stock price on the NASDAQ.

According to prosecutors, MURRAY, posing as an officer of a China-based entity called ABM Capital, filed forms with the Securities and Exchange Commission (SEC) on November 8, 2016, seeking access to the EDGAR system. The following day, he submitted a fraudulent filing claiming ABM Capital would purchase Fitbit for $12.50 a share – a hefty premium over the then-current market price of around $8.55. The filing triggered a surge in Fitbit’s stock, briefly reaching $9.27 per share with increased trading volume. The entire offer was a fabrication.

“As alleged, Robert Walter Murray created a fake tender offer for Fitbit to drive up its share price and then illegally profit from his manipulation of the market,” stated Acting U.S. Attorney Joon H. Kim. “After profiting at the expense of the public, Murray allegedly took elaborate steps to hide that he was behind the fraud. Our Office remains committed to ensuring that the securities markets are fair and free from manipulation.” The feds allege MURRAY then cashed in on the artificial inflation by selling call options he’d purchased prior to the sham offer becoming public.

Investigators say MURRAY went to considerable lengths to conceal his involvement. He used a pseudonym, a newly created email account, and masked his IP address when filing the false tender offer with the SEC. The complaint details that MURRAY even researched how to use the EDGAR system and scoured the internet for similar market manipulation schemes. Notably, he reportedly accessed a Bloomberg article about a previous fraudulent tender offer for Avon Products, a case previously prosecuted in this district (United States v. Nedko Nedev, 16 Cr. 093).

“Mr. Murray was clever, but not as much as the Fitbit brand he allegedly used when he set out to devise his stock manipulation scheme,” said Philip R. Bartlett, Inspector-in-Charge of the U.S. Postal Inspection Service. “In an effort to ‘get rich’ quick fraudsters believe they can game the system, but this arrest proves that no matter how much thought goes into a devious scheme, you can never outsmart law enforcement.” The SEC has also filed civil charges against MURRAY in connection with the scheme.

MURRAY was arrested in Virginia and is expected to be arraigned in Manhattan federal court today. If convicted of securities and wire fraud, he faces significant prison time and financial penalties. The case is being prosecuted by the Office of the United States Attorney for the Southern District of New York, with assistance from the U.S. Postal Inspection Service and the SEC. Grimy Times will continue to follow this case as it develops.