A Carlsbad father-and-son team pleaded guilty Thursday to using false financial statements and other lies in order to win more than $4 million in federal contracts, according to prosecutors.
The pair used the money for various personal expenses, including a down payment on a mansion in Rancho Santa Fe, nightclub charges and luxury hotel stays, prosecutors said.
Joseph Glenn Osborne Sr., 68, and his son, Joseph Glenn Osborne II, 31, pleaded guilty in federal court in San Diego to wire fraud and participating in a wire fraud conspiracy. Osborne II also pleaded guilty to lying in order to win federal contracts.
“Businesspeople who lie, cheat and steal have no place in federal contracting systems funded with American tax dollars,” U.S. Attorney Adam L. Braverman said. “We will be sure that white collar criminals manipulating the system from behind the scenes are held accountable.”
The elder Osborne, a government contracting consultant, admitted in his plea agreement to stealing more than $588,000 from three businesses that hired him. Osborne Sr. had promised these businesses he would represent them in winning and fulfilling contracts with the U.S. Department of Agriculture (USDA). Instead, he used their passwords to redirect their contract payments to himself, according to court documents and his plea agreement.
Osborne Sr. would lie when his clients inquired about the missing payments. He told one client he could not take their calls because he was seated on the jury for multiple-murder trial. Court filings show that Osborne Sr. has never reported for jury duty.
The elder Osborne used a portion of the stolen money as a downpayment on a $2.7 million Rancho Sante Fe mansion, according to his plea agreement. He also forged emails to conceal where the money came from. He claimed the money was an early withdrawal from a retirement benefits account at a company where he'd never worked, prosecutors said.
“This comprehensive investigation revealed a continued pattern of theft, deceit, and fraud — all for personal greed and self-promotion, FBI agent John Brown said.
After the elder Osborne was fired by his clients in 2013, he and his son submitted falsified financial documents to qualify the younger Osborne's new business — Worldwide Connect LLC (WWC) — as an approved USDA contractor. The pair also enlisted the help of Osborne II's friend and bookkeeper to prepare false financial statements that substantially overstated WWC’s financial health.
The statements falsely stated WWC had a surplus of $37,954 instead of a $5,546 deficit in 2013, prosecutors said. The Osbornes also admitted to falsely certifying to the USDA that none of WWC's principals had been suspended or debarred from federal contracting. Osborne Sr. was, in fact, suspended and disbarred from November 2013 to October 2016 for conduct associated with his prior business, Global Health & Safety, according to court documents.
As a result of the fraudulent submissions, WWC was approved for federal contracting and won more than $4 million worth of USDA food-supply contracts. Four of the five contracts were terminated for contractor default after WWC failed to deliver more than 100,000 cases of fruit juice and raisins to community food banks and lunch programs.
The Osbornes admitted that WWC caused its suppliers and financing company more than $1.5 million in losses. Meanwhile, the Osbornes paid themselves more than $285,000. They also used other companies' money for personal expenses, including nearly $10,000 in nightclub charges, hotel stays and more than $9,000 for new flooring in Osborne Sr.'s home.
After their contracts were terminated, the Osbornes applied to the Small Business Administration (SBA) to be re-admitted to federal contracting, according to their plea agreement. The younger Osborne misstated his father's military history in the application process, telling the SBA his father retired as a Marine Corps colonel when he retired as a first lieutenant.
The younger Osborne also submitted falsified tax returns to the SBA for himself and WWC, including an altered tax returned that converted his $14,870 tax liability into a $5,427 tax overpayment, according to prosecutors.
As part of their guilty plea, Osborne Sr. agreed to pay $1.7 million and his son $1.5 million to their victims. The two face up to 20 years in prison when they are sentenced on May 7.