Knoxville Man Sentenced For Fraud And Money Laundering

KNOXVILLE, Tenn. – On November 10, 2021, Hugh Leroy Murphy, 81, currently of Knoxville, Tennessee, was sentenced by the Honorable Katherine A. Crytzer, in the United States District Court for the Eastern District of Tennessee at Knoxville. 

As part of the written plea agreement, Murphy agreed to plead guilty to one count of mail fraud in violation of 18 U.S.C. § 1341; and one count of money laundering in violation of 18 U.S.C. § 1957.  Murphy was sentenced to 46 months in prison, followed by one year of supervised release.  In addition, Murphy was ordered to pay $2,215,202.08 in restitution to his victims.

According to court documents, in November 2018, a federal grand jury in the Eastern District of Tennessee returned a twelve-count indictment against Murphy, charging him with eight counts of wire fraud and four counts of money laundering.  The indictment resulted from a lengthy investigation by the U.S. Postal Investigation Service and the Internal Revenue Service.

Investigators found that from approximately May, 2002 through September 2016, Murphy defrauded individuals by offering fictitious annuity and purported equity policy investments in commercial real estate.  Instead of investing the funds as promised, however, Murphy diverted the funds to his own personal use and benefit.  Murphy created the appearance of returns on investment by paying earlier investors with funds received from later investors.  In addition, Murphy created the appearance of legitimacy by mailing statements containing fictitious information to his victims.  Over the course of the scheme, Murphy received at least $6,294,461.07 from 47 victims, who suffered a net loss of $2,215,202.08.         

The criminal indictment was the result of an investigation by the U.S. Postal Inspection Service and the Internal Revenue Service. 

Assistant United States Attorney Frank M. Dale, Jr. represented the United States.

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