Patrick Muraca found guilty of wire fraud, lying to investigators
NEW YORK — Berkshires entrepreneur Patrick Muraca has been found guilty of defrauding investors and lying to federal investigators.
Muraca, 49, of Pittsfield, was convicted by a jury after about a day and a half of deliberations at the Thurgood Marshall Courthouse in Manhattan.
The jury of six women and six men returned its guilty verdicts shortly after 1:30 p.m. Wednesday, while Judge Ronnie Abrams and attorneys were reviewing several questions submitted earlier by the jurors.
Muraca, the founder of several Berkshires biotech firms, is free on bail, pending his sentencing in the fall. His attorney said he "absolutely" plans to appeal.
There was little reaction from Muraca or others in the courtroom when the verdict was read.
Muraca's charges stemmed from alleged misuse of $335,000 to $370,000 invested into two companies he founded — MetaboRX and NanoMolecularDX — in 2016.
The companies were established to develop cancer diagnostic exams and complete cancer research, but prosecutors presented evidence that Muraca had used money invested into the companies on personal expenses, like dinners out, on mortgage payments and spluges at Coach, and to purchase items for his fiancee and her two restaurants.
Throughout the case, which started July 30, jurors heard from witnesses who invested in the companies, or observed the misuse of those investments.
The NanoMolecularDX accountant, whom Muraca hired after inquiries were being made into his spending, had testified that when she asked Muraca about questionable purchases at restaurants and shops, he would explain them as work-related. The jurors were shown several receipts for services, on which Muraca had doctored by adding the biotech company names as "customers."
Prosecutors laid out eight lies they alleged Muraca told the FBI and U.S. Attorney's Office during a November 2017 meeting, which were the basis of his second charge.
But the jury agreed unanimously on only one lie: that a $300 purchase at a tattoo and piercing shop in Northampton was not for "surgical steel tubing" for a company laboratory, as Muraca had told them. That purchase turned out to be on body jewelry for his fiancee, prosecutors said.
In opening statements and closing arguments, Muraca's defense team had acknowledged that its client had spent company money on business expenses, but attributed it to his "horrible" bookkeeping. Muraca felt he was entitled to commingle business and personal finances because he already had invested in getting the businesses off the ground, his attorney, Sarah Sacks, told the jury.
But prosecutors said that Muraca actually took out more money than he had invested in the companies, which were built on lies, starting with those he told some of the earliest investors in the company.
Muraca lied about how much he invested in the companies, how much revenue they were earning, and how much money had already been invested before the individuals signed on, prosecutors said.
After the verdict was read, Muraca stood in a hallway in the courthouse, looking at his phone as defense attorney Bennett M. Epstein confirmed plans to appeal.
The appeal, Epstein said, will be based on a judge's Wednesday morning decision not to define the words "funding" and "capitalization," as the jury requested in a note.
Those terms, which Abrams ruled not to weigh in on because they are not legal words, but rather business terms with several possible definitions, were "key" to the case, Epstein said.
One woman who sat on the jury and who declined to be quoted by name said "it was a hard case."
While jurors believed that there might have been some good intent behind the science and founding of the companies, Muraca also acted with bad intent while running the company and didn't act "on the up and up," she said while leaving the courthouse.
The wire fraud conviction has a maximum sentence of 20 years in prison and a $250,000 fine; a conviction of lying to federal investigators could result in a fine and maximum sentence of five years.
Haven Orecchio-Egresitz can be reached at email@example.com, @HavenEagle on Twitter and 413-770-6977.
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