John Murphy, the former Chief Executive Officer of Oak Rock Financial, LLC (Oak Rock), was sentenced in federal court in Central Islip, New York to 97 months of imprisonment. In December 2013, Murphy pled guilty to bank fraud after admitting that he had been lying to various financial institutions and investors regarding Oak Rock’s financial health since January 2009.
Oak Rock, a financial lending company located in Suffolk County, New York, secured lines of credit for businesses throughout the United States. During his time as Chief Executive Officer, Murphy misled banks about the state of Oak Rock’s financial health by providing them with false documentation concerning businesses that failed to make timely payments on their loans or that were in default. Murphy, who was compensated $600,000 a year, failed to address the defaulting loans and instead operated Oak Rock as if it were a sound financial organization through lies and deception. Specifically, he defrauded the banks by changing delinquency dates to make it appear that loans were current; booking fictitious payments, thereby creating fictitious accounts receivable; and falsifying delinquent accounts receivable by copying data from timely paid accounts so that the defaulting loans appeared to be timely paid and stable. These misrepresentations caused Israel Discount Bank, Oak Rock’s primary lender, as well as other financial institutions and private investors, to sustain losses totaling in excess of $93 million.