An administrative law judge found that Brendan Murray swindled the Cornerstone Funds and he wants Murray to pay it all back, plus interest and a fine. On Tuesday James T. Kelly ruled that Murray, former managing director of Cornerstone Advisors, "knowingly forged documents ... intentionally over-billed the Cornerstone Funds ... and subsequently received some of the proceeds of the fraudulent billing scheme."

In his decision, Kelly says Murray and Cornerstone president James DeMatteo inflated invoices and double-billed the funds for advisory fees, keeping the extra $122,241 through their own affiliated company. The pair and Cornerstone's insurers already settled a suit with the funds' liquidation trust for a total of $130,000 in November 2003. (Murray $15,000.) The fixed income funds began liquidating in February 2002, after which Murray admitted to and apologized for attempting to extort other Cornerstone executives.

Kelly ordered Murray to repay $27,200, plus more than five years worth of interest and a second-tier civil penalty of $60,000. Kelly also agreed to the SEC's request for a cease-and-desist order along with an order barring Murray from associating with investment advisors (and their employees).

DeMatteo previously consented to similar SEC cease-and-desist and association barring orders on September 26, 2006. However, DeMatteo's financial penalties and repayment were waived due to his financial condition.

Murray has twenty-one days to appeal the decision before the commission itself makes it final. James McGovern and Susannah Dunn represented the SEC's division of enforcement in the case.

Through his own investment advisor White Star, Murray currently works with the Ehrenkrantz Growth Fund and its advisor, Ehrenkrantz Asset Management. In September 2005 the SEC filed a separate complaint, still pending against Murray and Ehrenkrantz King Nussbaum accusing them of "market-timing activities." 

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