A Utah County man involved in a scheme to fraudulently obtain a $99 million contract from the government has been ordered to serve two years of probation.
Michael Tingey, 48, of Cedar Hills, was sentenced Thursday after pleading guilty to wire fraud. Tingey was previously the CEO of Odyssey International Inc., which was fined $5 million, according to court records.
The company was owned by Arizona resident Whitney McBride, who was found guilty in June of conspiracy to commit wire fraud, major fraud against the United States, and making false statements to federal law enforcement and to the court.
She was sentenced in November to 30 months in federal prison, followed by 36 months of supervised release, according to court records. She was also ordered to forfeit $2,271,841.16 from seven bank accounts.
Tingey had a smaller role in the fraud to McBride and former chief financial officer Kin Shing Paul Lee, according to a sentencing memorandum.
"Although Mr. Lee and Mr. Tingey provided much of the leg work, Ms. McBride called the shots and directed her employees to commit the fraudulent activities," it states. "Mr. Tingey has fully accepted responsibility for his crime."
It also states that Tingey met with government officials both before and after his plea, and testified extensively at McBride's trial in May.
During that trial, the company admitted that its application for government contracts was fraudulent but placed the blame on Lee, who had already pleaded guilty to wire fraud. Lee was sentenced in January to a year in federal prison followed by 24 months of supervised release.
The jury ultimately decided to convict McBride and the company on all counts, according to court records.
McBride and Odyssey International were initially accused of fraudulently claiming special status under the U.S. Small Business Administration in order to bid on a contract to work at the Fort Drum military base in New York, according to the Utah U.S. Attorney's Office. Prosecutors described McBride as Odyssey's founder and owner.
A superseding indictment from October accused McBride and the company of carrying out a scheme to obtain contracts through the Small Business Administration set aside for businesses in "historically underutilized business zones." Often the areas that qualify as historically underutilized business zones include Native American reservations and areas with a closed military base, according to federal prosecutors.
In order to qualify for those zone contracts, businesses must have at least 35% of employees living in the zones and the contracts must be awarded to small businesses. The program is meant to award government defense contracts in the hopes of economically stimulating the underutilized areas, according to the indictment. The program is also meant to "provide contract opportunities to businesses owned by individuals who have personally experienced discrimination," a statement from the U.S. Attorney's Office says.
Odyssey and McBride were accused of falsifying information in order to claim the company qualified for government contracts. Much of the criminal conduct took place in Utah, prosecutors say, though Utah business records list the company as being based in Arizona.
Prosecutors say that in 2011, Odyssey placed the bid to work at the New York military base knowing it did not meet the historically underutilized business zone standards. The company did not have 35% of employees living in the zone and Odyssey was not a small business, prosecutors say.
Odyssey had employees falsify addresses on their driver's licenses and voter registrations to show they lived in the designated zone, charging documents state. The company also placed zone residents who did not work for the company on the payroll in order to claim them as employees. Odyssey also used a shell company to pay employees outside of the zone away from the company's records to hide them from the Small Business Administration, federal prosecutors say.
Charging documents point out individual instances that allowed Odyssey to misrepresent itself, including an instance where an employee's paycheck was split between him and his wife in order to also list her as another historically underutilized business zone resident. The company also requested that an employee change their voter registration to a relative's address to give the appearance they lived at the address, the indictment says.
The company was later admitted to the government program and obtained over $200 million in contracts over nine years.