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Spa owner pleads guilty in fraud case

A Tampa spa owner has pleaded guilty to 14 counts of mail fraud, but is disputing part of the government's claim that he defrauded almost 300 investors out of more than $16-million.

In a plea filed late last month in Chicago, Michael Murphy, owner of the upscale Spa Malia in Hunter's Green, admitted guilt and will be sentenced in October.

"There is some disagreement between him and the government over the facts of the guilty plea," said Randall Samborn, a spokesman for the U.S. Attorney's Office in Chicago.

Spa Malia closed in February, and customers were left scrambling to find other spas that would honor their gift certificates. Murphy surrendered to authorities a few days later in Chicago.

Federal prosecutors accused Murphy, 44, of using his firm _ Michael J. Murphy Associates Insurance Planning and Design, based outside Chicago _ to defraud clients for more than 15 years. According to a court affidavit, Murphy enticed customers by promising them returns of up to 20 percent a month. The government said Murphy spent almost $16-million from 293 investors on himself.

He bought art, jewelry, homes and cars, authorities said, and paid returns to investors from other investors as part of a Ponzi scheme.

In court, Murphy admitted to spending some money on himself, but said he invested the bulk of it on the insurance agency, two popcorn businesses, real estate and Spa Malia, said his lawyer, Luis Galvan. But some of the businesses faltered, Murphy's finances "reeled out of control," and he shifted around money to pay off investors, Galvan said.

If the judge agrees with Murphy's contention that he took money from about 190 investors, he could be sentenced to as much as seven years in prison, Galvan said. If the judge decides Murphy defrauded more than 190 investors, he could get as much as 12 years.

Galvan said Murphy apologized to his victims.

The future of the spa remains unclear. The government has seized many of Murphy's properties. The spa, which turned a profit, could be seized and sold to help recoup investors' losses.

_ John Balz can be reached at 269-5313 or at balzsptimes.com

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