In a federal courtroom here packed with many of his victims, most of them elderly women, former hedge fund manager Krittibas Ray was sentenced June 15 to 65 months in prison for bilking his investors out of more than $3 million.
Clad in a yellow Alameda County jail track suit and minus his trademark gel-pouffed hair, an ashen-faced Ray — a fixture at Indian American community events — sat impassively as 15 of his victims detailed to U.S. District Court Judge Susan Illston the considerable damage the charismatic financier had done to their lives.
At several points, the 43-year old Indian American attempted to make eye contact with his victims in the court’s gallery, but spent the latter half of the hour-long sentencing avoiding silent confrontation by hiding behind the shoulder of his attorney, public defender Elizabeth Meyer Falk.
“I am sorry,” said Ray before he was sentenced, in the taciturn tones of a truculent teen. The Kolkata-born father of two twin girls promised he would repay his victims.
Despite emotional statements made in court by Ray’s former investors, Illston affirmed a plea agreement that had been arranged beforehand, after Ray pleaded guilty Mar. 30 to two counts of wire fraud. The plea agreement mandated that Ray spend 65 months in custody, and return $2.75 million in restitution to his victims. The agreement also stipulated that Ray seek drug abuse and mental health counseling and never work in any finance-related activity again.
Maurice Fakhoury, who spoke in court for his mother Martha, an 82-year-old woman who had invested $350,000 with Ray, told Judge Illston, “My mother had 40 years of her life savings stolen from Krittibas.” He pleaded with the judge not to victimize the victims again by giving Ray the already-agreed-to sentence and stated that Ray deserved at least 12 years.
Sarah Garabedian, told the judge that Ray had approached her teenaged son, urging him to invest $2 million of his inheritance after his father died in his fund.
“He is an egomaniacal sociopath who should be imprisoned to the fullest extent of the law,” said Garabedian, adding that she felt “shamed and depressed” for failing to protect her son from such an obvious con artist.
A representative speaking on behalf of Doris Hunt, an 84-year-old woman with cancer, said Ray convinced the widow to take out a reverse mortgage to invest $260,000 in his fund. When she asked for money back to pay for cancer treatments, which cost $640 a day, Ray allegedly became violent with her, according to Hunt’s representative, who herself lost her home while investing with Ray.
Public defender Falk characterized Ray as mentally unstable, saying that her client was afflicted with “displacement reality,” which drew guffaws from the gallery.
“I wish there was a way to make you whole through this part of the system, but I cannot,” Illston told the courtroom before reading the sentence. “This case was so up close and personal and it breaks my heart,” she said, urging the FBI and the U.S. government to find more of the victims’ money.
Speaking after the sentence was handed down, Fakhoury told India-West, “This was literally a waste of time. The deal had been cut already, and we the victims had been cut out of it.”
Fakhoury said he had little hope of receiving restitution from Ray, who will begin paying back his victims at a rate of $25 per quarter while incarcerated, and a minimum of $250 a month once he is released.
“How is he going to pay back all that money working at McDonald’s or driving a cab?” queried Fakhoury.
Another elderly victim, who was not named, said that five and a half years was “way too light for the crime. “If he gets out, he’ll just do it all over again. He has shown no remorse at all,” she stated tearfully.
From September 2008 to December 2011, Ray founded two hedge funds and amassed more than $3 million in assets, promising investors he could guarantee a rate of at least eight percent per year by investing the funds with the State Bank of India, Goldman Sachs and Merrill Lynch (I-W, Mar. 30).
Instead, according to court documents, Ray used much of his investors’ money for his own personal gain — including paying his divorce lawyers, rent and housekeeping on his Albany home, and buying a home for his mother in Kolkata.
Ray continued to solicit investors long after he had lost his brokerage license in 2010.
He initially started his operations from White Pacific Securities, Inc., based in downtown San Francisco, and continued to work there even after he was laid off from the firm in 2010, continuing to generate correspondence using his WPS e-mail address.
Ray met potential investors at his WPS office, situated in a high-rise building with an expansive view of the bay. Several victims noted that Ray’s WPS office lent him an undeserved credibility.
Ray’s former investors, who have formed a group in an attempt to recover some of their money, say that WPS CEO Robert Angle should also be criminally charged for continuing to allow Ray to associate with the company long after he lost his license.
Assistant U.S. Attorney Doug Sprague, who prosecuted the case against Ray, told India-West outside the courtroom that he had no indication that Angle and WPS were involved with Ray’s activities, and could not comment as to whether criminal charges would be filed against the company or Angle.
Chicago, Ill., residents John and Lucy Mattinen initiated a suit against Angle and WPS in 2011, claiming that the company allowed Ray to defraud them of $200,000. In court documents, the Mattinens claimed they received e-mails from Ray on a WPS address, and had dealings regarding their assets with WPS associate Kim Wong. Ray used the WPS address in his investor brochures, and maintained a phone line at WPS offices, as well as using the company’s stationary for his correspondence.
Angle could not be reached for comment for this story, but said in court documents, “WPS never participated in, supervised, or received compensation or commissions related to Ray Pacific, and has no association in [Ray Pacific] or any investment in which Dr. Ray may have been involved.”
Angle further stated that “WPS did not participate in, supervise, or receive commissions, referral fees, allowances or any other type of compensation related to any of Dr. Ray’s investment advisory activities or defendants’ alleged investment. Such activities were independent of WPS’s relationship with Dr. Ray.” The case is still pending.
The sole Indian American attending the sentencing, also a prominent figure in the community who asked not to be named because he has not told his wife about his bad investment, told India-West that Ray contacted him in November 2011 — after an FBI investigation had already begun — and aggressively solicited him to invest in a new fund he was creating.
“He told me ‘I can guarantee you 10 percent easily,’ so I invested some money that I had been saving for my grandchildren’s education. He came to my house in a chauffeur-driven car, showed me all his great connections, and I took him at his word. I was gullible,” said the victim, who compared Ray to Ponzi-scheme promoter Bernard Madoff and stated that Ray should receive a life sentence.
In court, the victims urged the FBI and the U.S. Attorney’s office to seek out Ray’s allegedly-hidden stash of cash.
According to FBI documents, Ray also diverted thousands of dollars to Absolute Fund Advisors, which billed itself as offering a 9-1 capital match with investments outside the U.S. On June 4, the Securities and Exchange Commission charged AFA with operating a Ponzi-like scheme which bilked at least $11 million from several investors. Ray’s former investors asserted that Ray has hidden his assets under his mother’s name in India, and note that he has bragged about having assets in the Cayman Islands.
Sprague told the victims after court that the FBI had tracked much of their money and how it was spent by Ray. Some of the money was lost, admitted Sprague, who later told India-West he could not state how much money was unaccounted for.
Sprague also told victims that the U.S. Attorney’s office would likely not go after Ray’s assets abroad.
Because the sentencing applied only to Ray and not to a corporation, his investors would not be able to apply to the Victims of Corporate Fraud Compensation Fund, established by the state of California 10 years ago.
Despite the criminal investigations, Ray maintained a consistent presence at Democratic party events. In October 2011, two months before his arrest, Ray attended an event featuring California Lieutenant Governor Gavin Newsom and former U.S. President Bill Clinton. Later that month, the Indian American attended a birthday party for California Attorney General Kamala Harris, and a breakfast roundtable with Sen. Mark Warner, D-Virginia, who had stopped in San Francisco to discuss the future direction of the Senate India Caucus.
On his Facebook page, Ray lists several local and state politicians along with prominent Democratic party activists and fundraisers among his circle of friends. He has consistently donated campaign funds to Sen. Barbara Boxer, D-Calif., as well as other local politicians.