A Utah jury has found an Arizona company and its owner guilty of fraud and lying in claims seeking millions of dollars in federal government contracts. (Scott G Winterton, Deseret News)
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SALT LAKE CITY — A federal jury in Utah has found an Arizona business owner and the company itself guilty of making false statements to the government in order to secure a $99 million contract. dollars.
Whitney McBride, 41, of Queen Creek, Arizona, was convicted on Wednesday of conspiracy to commit wire fraud, wire fraud, major fraud against the United States and misrepresentation to federal law enforcement and in court.
McBride and the company, Odyssey International Inc., were originally accused of fraudulently claiming special status with the Small Business Administration in order to bid for an employment contract at the Fort Drum military base in New York, according to a statement. press release Thursday from the Utah US Attorney’s Office. Prosecutors described McBride as the founder and owner of Odyssey.
A superseding indictment from October accused McBride and the company of carrying out a scheme to obtain contracts through the SBA restricted to businesses located in “historically underutilized business areas”, or areas HUB. Often, areas that qualify as HUB areas include Native American reservations and areas with a closed military base, the news release said.
To be eligible for HUB zone contracts, businesses must have at least 35% of employees living in the zones, and contracts must be awarded to small businesses. The HUB Zone Program is intended to award government defense contracts in hopes of economically boosting underutilized areas, according to the indictment. The program also aims to “provide contract opportunities to businesses owned by individuals who have personally experienced discrimination,” the press release said.
Odyssey and McBride were accused of falsifying information to claim the company was qualified for government contracts. Much of the criminal conduct took place in Utah, prosecutors say, although Utah business records indicate the company is based in Arizona.
Prosecutors say that in 2011, Odyssey made an offer to work at the New York military base, knowing it did not meet HUB Zone standards. The company did not have 35% of employees living in the area and Odyssey was not a small business, the press release said.
Odyssey had the employees falsify addresses on their driver’s licenses and voter registrations to show they lived in the designated HUB area, according to the charging documents. The company also placed residents of the HUB area 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 the HUB area away from company records to hide them from the SBA, the press release said.
Billing documents point to individual instances that allowed Odyssey to misrepresent itself, including one instance where an employee’s paycheck was split between him and his wife in order to also list him as a other resident of the HUB area. The company also had an employee change his voter registration at a relative’s address to make it look like he lived at the address, the indictment says.
The company was then admitted to the government program and secured more than $200 million in contracts over nine years.
During the trial, the company admitted its claim was fraudulent, but blamed the company’s former chief financial officer, Paul Lee, who had previously pleaded guilty to wire fraud. The company’s former chief operating officer, Michael Tingey, also pleaded guilty to wire fraud, according to the press release.
The jury ultimately decided to convict McBride and company on all counts, with the verdict read just before 6 p.m. Wednesday, court records show. The sentencing hearing in that case is scheduled for September 1 at the federal courthouse in Salt Lake City.