Timothy P. Murphy, age 55, from Cambridge, the owner of Murphy Locomotive Repair, Inc., pled guilty to one count of filing a false individual return.  Murphy entered his plea before Judge Ann Montgomery in Minneapolis.

Murphy admitted in court that from 1996 through 1998 he knowingly understated the true amount of income his company received and intentionally overstated the cost of goods sold and corporate expenses by claiming his personal spending as corporate expenses on personal and corporate tax returns filed for calendar years 1996 and 1997.  Murphy’s conduct concealed $84,506 in income, resulting in a tax loss of more than $23,500.

Murphy faces a maximum potential penalty of three years in prison and/or a $250,000 fine. The actual sentence will be determined by Judge Montgomery based on the federal sentencing guidelines.  A sentencing date has not been set.

The case is the result of an investigation by the Internal Revenue Service - Criminal Investigation and was prosecuted by Assistant United States Attorney Mike Ward.