Prominent Hedgie Renee Haugerud Embroiled in Ugly Child Custody Battle

Sep 10 2014 | 2:43pm ET

A high-profile hedge fund manager is caught up in a nasty child custody battle in Georgia.

Renee Haugerud, founder of the New York-based commodity-focused hedge fund Galtere, is embroiled in a dispute between her husband, John Murphy, and his ex-wife Michelle Murphy—a dispute that has sparked a social media campaign to “free” the Murphys' two children.

According to Michelle Murphy, her sons—15-year-old Jack and 13-year-old Thomas—are being “held against their will” by their father at the home he shares with Haugerud on St. Thomas in the U.S. Virgin Islands.

Jack Murphy sends a photo of himself to his mother. The photo is allegedly taken with a friend's mobile phone.Jack Murphy sends a photo of himself to his mother. The photo is allegedly taken with a friend's mobile phone.

“I am not permitted to contact them,” Michelle Murphy told FINalternatives. “They are being held with no cell phones, no home phones, no internet...cameras in every room, intercoms in every room.... Nobody is allowed to come into the house. They're being imprisoned.”

The current situation stems from the Murphys' 2006 divorce, during which Michelle was granted primary custody of the boys and child support of $1,500 per child per month.

In 2012, John, now married to Haugerud, applied for increased visiting time or primary custody. According to the court filings, John was prompted to act by fears Michelle planned to move from Newnan, Georgia to South Carolina with the children, a move Michelle said she never contemplated. Haugerud told FINalternatives John also simply wanted more time with his children.

Michelle's lawyer, Millard Farmer, said: “When it looked like the judge was going to rule against them and just give Michelle the children…, then John tells the custody evaluator that one of the children told him that the mother was fondling the children, which was an absolute lie.”

The allegation that there may have been sexually inappropriate contact between Michelle and one of the boys arose during testimony by Dr. Patricia Nice, a psychiatrist asked by the court to interview the boys in November 2012 and provide an opinion as to whether a custody evaluation was called for.  Dr. Nice testified "several allegations (some sexually inappropriate in nature) have been made to her about the children which demand a detailed investigation.” She recommended a custody evaluation. In doing so, John Murphy told FINalternatives, she was echoing an early recommendation for a custody evaluation from the boys' treating psychologist and psychiatrist.

Michelle denies the allegations of inappropriate sexual contact and so, apparently does Jack, the older son, in a letter posted on the Facebook page devoted to the “Free Jack and Thomas” campaign.

“How could you say that my mom molested me?” the letter reads. “That is the biggest lie.”

Letter allegedly written by Jack Murphy to his father and step-mother.Letter allegedly written by Jack Murphy
to his father and stepmother.

Judge Quillian Baldwin, Jr. ordered the parties to submit to a custody evaluation, including a psychological examination. John complied but Michelle refused and in March 2014, Judge Baldwin ordered her a second time, warning her, according to the transcript, that if she had not complied by their next hearing: “I have no choice, but at that time, I'm going to also have a temporary hearing on custody of the children. And if you have not complied, I can only assume that you've got something to hide, and it's pretty bad.”

Michelle did not comply and the judge awarded temporary custody to John and ordered Michelle to have no contact with the boys. John took the children to St. Thomas where they have now been for over 100 days.

Haugerud—a prominent figure in the hedge fund industry who is well-known for her advocacy of women in business as well as her support for various charities—said taking the boys' cell phones was necessary to comply with the court order, but claimed they have internet access at their school and have had friends come to visit them. They were also in contact with Michelle by means of a “secret” cell phone for some weeks and Haugerud herself admits to letting one of the boys use the home phone to call his mother. Haugerud said she tells the boys, “'I want you to be able to go home, we cannot send you home.' I tell them that everyday. 'Please call your Mom and tell her to do the mental exam.' And she just refuses to do it."

But Farmer claims the custody evaluation playing field  is tilted toward the wealthier partner—in this case, John, by virtue of his relationship to Haugerud, whom Michelle describes as “John's source of income.”

Said Farmer: “Michelle, she gets $1,500 dollars a month for child support and she works as a hairstylist out of her house, and...they began to make these requirements that she go to a custody evaluator and...if you don't have an advocate on the other side of the evaluator, then the custody evaluator is going to tell the judge, 'Well, look, these people have the most money, they can offer these children the most and it's in their best interest to go with the parent that has the money. They're going to give them a good life.'”

Michelle also suggests that the timing of John's demand for modification of custody coincides with his and Haugerud's decision to move to the USVI and could be part of their effort to establish residency for tax purposes, a claim Haugerud dismisses as “crazy.” 

"We began considering the custody action in 2011 and filed it in April 2012, years before Galtere’s 2014 relocation to the Virgins Islands had even been considered," said John.

Farmer has launched numerous appeals—during that March 2014 hearing, John's lawyer, Taylor Drake, told the judge that Farmer has “appealed every single order in this may not be aware of that, but every single order has been appealed”—including one to have the judge recuse himself on the grounds that he is friends with John's lawyer, but to date none has succeeded.

“The only hope in this world that we have is that we'll tell this story to the public and the public will see it and the judge will become ashamed of what's going on,” said Farmer.

Jack and Thomas' friends call for their return home.Jack and Thomas' friends
call for their return home.

Michelle said she has received a great deal of support from her neighbors in Newnan, about 40 miles southwest of Atlanta, for her campaign to bring the boys back from St. Thomas. Backers plan a town meeting on Sept. 18 to discuss the case, and friends of the boys have taken to wearing blue ribbons in their honor.

“I just had them all over here yesterday,” Michelle said. “There were 20 of them making signs. I just ordered 200 yards of ribbon. All the kids are starting to wear them on their backpacks.”

The goal of her campaign, she said, is “to get my children back where they want to live.”

Haugerud said her concern is also for the boys and she hopes to see the matter resolved in a way that is best for them.

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