Business lender Oak Rock Financial LLC’s former chief executive was sentenced to more than eight years in prison for covering up a surge of delinquent borrowers.
John Murphy, 65, fudged dates, booked fictitious payments and falsified accounts so client loans “appeared to be timely paid and stable,” prosecutors said in a statement. The fraud eventually caused the Long Island, New York-based financial firm’s lenders to suffer more than $93 million in losses, according to the government.
U.S. District Judge Leonard D. Wexler sentenced Murphy on Tuesday in Central Islip, New York, prosecutors said.
Instead of addressing the company’s failing loans, Murphy used “lies and deception” to operate the firm “as if it were a sound financial organization,” prosecutors said.
Murphy pleaded guilty in 2013 to bank fraud, admitting that since 2009 he had lied to his company’s primary lender, Israel Discount Bank of New York, and other firms about Oak Rock’s financial health.
Stephen Scaring, Murphy’s lawyer, said at the time that his client “didn’t put any money in his pocket” and was trying to salvage the company’s business amid the recession. Scaring didn’t immediately respond to a call for comment on Tuesday about the sentencing.
Oak Rock was put into bankruptcy protection in April 2013 while owing about $90 million in principal to the lenders.
The case is U.S. v. Murphy, 2:13-cr-00702, U.S. District Court, Eastern District of New York (Central Islip).