UPDATE 4-Boston Provident CFO charged with theft

* Ezra Levy accused of stealing more than $1.3 million

* Faces 11 criminal fraud counts, SEC civil charges

* Boston Provident says it tipped off prosecutors

* Levy released on $1 million bond (Adds release on bond)

By Joseph A. Giannone and Jonathan Stempel

NEW YORK, Nov 10 (Reuters) - The chief financial officer of Boston Provident LP was arrested Tuesday on charges of stealing more than $1.3 million from the Manhattan hedge fund firm.

Federal prosecutors accused Ezra Levy of 11 counts of wire and securities fraud in two schemes to defraud Boston Provident, which is run by Orin Kramer, chairman of the New Jersey State Investment Council, which oversees that state's pension fund.

Levy is accused of wiring $726,000 to his personal bank account from Boston Provident in monthly installments from January to October this year.

He is also accused of generating a $600,000 profit for himself by having Boston Provident buy shares of Atlas Energy Inc ATLS.O and Atlas Energy Resources at inflated prices from an account he controlled.

Boston Provident, in a statement, said it has fired Levy and intended to seize his partnership assets. It said Kramer would personally replace the stolen funds and cover the firm's legal fees.

The firm also said it was "outraged" to learn of the theft, which it called an "egregious violation" of the law and its investors' trust, and had alerted authorities to the matter.

Levy faces up to 20 years in prison and a $5 million fine on the securities fraud charge, and up to 10 years in prison and a $250,000 fine on each of the 10 wire fraud charges.

He was released on $1 million bond and ordered to surrender his passport. The U.S. Securities and Exchange Commission on Tuesday filed related civil charges against Levy.

Levy's defense lawyers did not immediately return calls seeking comment.

KRAMER A DEMOCRATIC FUNDRAISER

Kramer founded Kramer Spellman LP, which later became Boston Provident.

Though the firm manages just $157 million, Kramer is a prominent investor and leading Democratic fundraiser. Three decades ago, Kramer served as associate director of White House domestic policy staff under President Jimmy Carter.

The U.S. Attorney's office in Manhattan said Levy was arrested Tuesday morning at his home.

Atlas Energy is an independent natural gas producer in the Appalachian and Michigan basins. The company is based in Moon Township, Pennsylvania.

The criminal case is U.S. v. Levy, U.S. District Court, Southern District of New York, No. 09-mag-2473. The civil case in the same court is SEC v. Levy, No. 09-9340. (Reporting by Joseph A. Giannone and Jonathan Stempel; additional reporting by Elinor Comlay in New York and Rachelle Younglai in Washington; editing by Maureen Bavdek, Matthew Lewis, John Wallace and Steve Orlofsky)