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A Knoxville man has been sentenced to 46 months in prison followed by one year of supervised probation for fraud and money laundering.

Hugh Leroy Murphy, 81, was sentenced by the Honorable Katherine A. Crytzer in the United States District Court for the Eastern District of Tennessee at Knoxville. Murphy was ordered to repay $2,215,202.08 in restitution to his victims, agreeing 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 as a part of his plea deal.

The Federal Grand Jury in the Eastern District of Tennessee returned a 12-count indictment against Murphy, charging him with eight counts of wire fraud and four counts of money laundering, according to court documents.

Investigators unearthed a scheme lasting the better part of 14 years in which Murphy defrauded individuals by offering fictitious annuity and purported equity policy investments in commercial real estate.

Documents showing these transactions run from sometime in May 2002 through September of 2016.

Instead of investing the funds as promised, however, Murphy diverted the monies to his own personal use and benefit. He created the appearance of returns on investment by paying earlier investors with funds received from later investors. 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.