Authorities allege that Thomas Murphy, 68, became a "mule" for an overseas ring that took in $800,000

They preyed on the elderly — often by trolling obituaries for new widows or widowers — and enticed them into believing they'd won a lottery but needed to pay the tax on their winnings to claim them.

Thomas Murphy, 68, a retired principal, teacher and coach from Henderson, Minn., started as a victim. Then, police say, he joined the scam in a failed attempt to try to recoup his losses.

Authorities allege that Murphy, a widower with two master's degrees and no criminal record, eventually helped bilk elderly strangers out of more than $800,000. He worked at it for more than a year, and when police came to arrest him, he had $10,000 in his freezer, according to case documents.

Bill White, a special agent with the Minnesota Department of Public Safety, said Murphy's own victimization is thin justification for what he is alleged to have done.

"You're a criminal now. You're not a schmuck," White said. "Just because you feel like you're a victim, you can't victimize other people."

Prosecutors who filed felony racketeering charges against Murphy say he was a "mule" for the operation, collecting from victims and wiring money to overseers in the Philippines, where they remain out of reach of U.S. authorities.

Investigators say Murphy ultimately didn't get an appreciable cut of what he scammed.

Among the victims was an 88-year-old woman who lost $290,000. She told White in tears that she was forced to sell her home and move in with her son.

"They are unbelievable predators," White said. "They won't stop with just the money people have."

Thought he'd won $2 million

Charges say Murphy admitted accepting delivery of thousands from victims, then obeyed instructions on where to wire it. He claimed he did not know any of the victims and did not contact them himself. Confronted by investigators, Murphy allegedly showed them multiple express-mail packages, wire transfer receipts and the cash in his freezer, which he allegedly received that day from another mule in Missouri.

Sibley County prosecutors charged Murphy on Oct. 15. If convicted, he faces up to 20 years in prison and a $1 million fine. Police arrested him last weekend. He was held in the Sibley County jail on Tuesday in lieu of $200,000 bail, pending a Thursday court appearance. He did not yet have an attorney, and jail staff declined to pass to him a request from a reporter for comment.

AARP spokeswoman Amy McDonough said such scams commonly target the elderly, some of whom are too embarrassed to report it. The scammers often pose as someone with authority, such as an IRS agent.

According to charges:

Murphy first called the Sheriff's Office in September 2009 and reported receiving a phone call a month earlier from a David Bauman, who told him that he had won $2 million. But Bauman said that the taxes on the winnings would be $436,000 and that he would have to pay at least some of that before receiving the money.

Murphy sent more than $120,000 before realizing he'd been scammed.

He contacted the Sheriff's Office again in January to report phone calls from Bauman and his associates threatening to take his home if he did not pay more. Authorities told Murphy to notify them if the scammers called again. Six months later, the IRS alerted local authorities that Murphy had wired large amounts of money, primarily to the Philippines. When questioned, Murphy admitted that he had gone to work for Bauman, an identity that White said is likely fake.

Overseas scam artists commonly use so-called mules, White said, adding that Murphy's name and Minnesota address lent credibility to the scheme. The scammers often use the money to finance drug activity and other criminal enterprises, White said.

'Web of fraud'

White, in law enforcement for 29 years, said the scam that snagged Murphy is "the most unbelievable web of fraud I've worked on."

Murphy was a teacher, principal and coach in the Le Sueur-Henderson School District for decades before retiring about 10 years ago. In retirement he volunteered for the district as a cross-country coach, but he's been suspended pending the outcome of the case, said Superintendent Dave Johnson.

"Tom was a really good-hearted teacher, coach and administrator," Johnson said. "This is a shock. A big shock."

Visited first in July, Murphy allegedly handed investigators 24 different packages full of cash, along with notes and envelopes. A month later, when investigators asked why he joined a group that tricked him, he responded: "Blind faith."

On Oct. 10 Murphy reported to the Gaylord Police Department for an interview. There, he supplied the remainder of the receipts for money he'd forwarded, totaling $800,601.94. His victims, from throughout the country, were almost all elderly.

"Murphy showed no remorse for assisting in victimizing other elderly people," the charges said. "Murphy summarized by saying he screwed up and can't do anything about it now."

(Click to display full-size in gallery)Thomas Lawrence Murphy was arrested on charges of participating in a lottery scam.