A wine storage business owner in Irvine pleaded guilty Friday to stealing $2.7 million worth of wine from his clients and under- reporting about $3.5 million in payroll taxes in a plea deal that got him six years in prison.
George Osumi II, 65, of Newport Beach, created multiple companies between 2001 and 2011, using the names of relatives and friends so he could avoid tax liability while operating the businesses, according to Deputy District Attorney Shaddi Kamiabipour.
Osumi cheated the State Compensation Insurance Fund of about $814,000 by under-reporting payroll between December 2001 and March 2006, Kamiabipour said.
From May 2004 through October 2011, he used a former business associate's name to get an American Express Card, which he used to make unauthorized purchases, the prosecutor said.
Osumi also withheld state taxes and disability insurance benefits payments from his employees from 2009 through 2011, but he pocketed the money instead of forwarding it to the state, Kamiabipour said.
One of his employees was unable to collect unemployment because of the theft, Kamiabipour said.
"One employee who wanted to retire couldn't because her Social Security (benefits) weren't paid into for several years," Kamiabipour said. "One employee almost got arrested because the (payroll) checks he tried to cash wouldn't clear. At one point the police thought it was someone going around passing bad checks."
Osumi's crimes left "a lot of collateral damage and direct damage, and that's why we put our foot down and said this is a state prison case," Kamiabipour said.
From January 2008 through June 21, 2011, Osumi operated Legend Cellars Inc. in Irvine, a business that stored wine at a controlled temperature. Three times, Osumi broke into private storage lockers and stole their wine, which was worth about $2.7 million.
To conceal the theft, Osumi left behind bottles of a much cheaper vintage, Kamiabipour said.
In 2008, Osumi hired a friend, who was unaware the wine was stolen, to auction off pilfered wine to split the proceeds, Kamiabipour said.
Osumi put about $280,000 into his business account and used the money for personal expenses and legal fees, Kamiabipour said.
Between July 20, 2011 and June of last year, Osumi auctioned off some stolen wine for about $310,000, Kamiabipour said.
Osumi was given credit for 674 days in custody. He will return to court Nov. 1 for a hearing to determine how much restitution he owes his victims, Kamiabipour said.
"There's no indication he can pay it," Kamiabipour said. "He's been living off of his stealing for years."
If Osumi has a windfall of money, such as from a lottery, the proceeds would be used to pay victims, Kamiabipour said.
The defendant's own son and daughter were victims in the case. Their father used them as "pawns" in the thievery, and initially investigators thought the two were involved, Kamiabipour said.
Osumi could have faced up to 80 years in prison if he had been convicted at trial, but prosecutors were "satisfied" with his punishment, Kamiabipour said.
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