Miami businessman Claudio Osorio gets 12 years in prison for fraud conviction
09/17/2013 2:47 PM
09/18/2013 2:55 PM
Claudio Osorio, a Venezuelan native who rose to the top of Miami's business community, was humbled Wednesday when a federal judge sentenced him to 12 1/2 years in prison for stealing tens of millions of dollars from investors in his failed venture to build low-cost construction materials for housing in developing countries.
U.S. District Judge William Dimitrouleas also ordered Osorio, 54, to pay back about $24 million to investors in his defunct company, Innovida Holdings, Inc.
The judge gave Osorio credit for pleading guilty to three conspiracies of wire fraud and money laundering and accepted the prosecution's recommendation that he receive a 10 percent sentence reduction under federal guidelines. But Dimitrouleas still imposed a sentence that nearly equaled the low end of those guidelines, saying Osorio committed “extensive fraud.”
Osorio, who once lived on Star Island before his arrest last December, apologized to his family, Innovida employees and investors.
“I betrayed all the faith and belief they deposited in me,” Osorio told the judge. “I failed them.”
Osorio, who once hobnobbed with Bill Clinton, Hillary Clinton and Barack Obama at fundraisers in his waterfront home, pleaded guilty in February to three conspiracy offenses involving wire fraud and money laundering.
After running a Fortune 500 computer-distribution company that went bankrupt in 2000, Osorio launched an ill-fated venture named Innovida Holdings to build low-cost housing in Haiti and other developing countries. That start-up got him into serious trouble with investors and the feds.
Osorio also will be required to pay restitution of between $20 million and $50 million to investment victims, but only a fraction of that money has been recovered so far in a parallel bankruptcy action.
FBI agents built a fraud case against Osorio after some of his investors, including NBA basketball stars, accused the globe-trotting entrepreneur of using his Miami Beach-based company, Innovida, to swindle them and the U.S. government.
According to an indictment, Osorio conspired to fleece $40 million from 10 investors and an additional $10 million from a federal government program between 2006 and 2011. The government grant was for building 500 homes in Haiti after its devastating earthquake in January 2010 — a project that Osorio touted to promote his company, but which never broke ground.
Instead, Osorio moved investors’ money to off-shore bank accounts in the Cayman Islands. The bankruptcy trustee of his failed company, attorney Mark Meland, said he could not recover any money there because it was either spent on Osorio’s extravagant lifestyle or squandered.
Meland also said he uncovered evidence that Osorio fabricated emails from foreign bankers regarding his account balances in the Cayman Islands.
The main investor who led the legal offensive against Osorio: Miami businessman and attorney Chris Korge, who sank $4 million into Innovida, including $3 million borrowed from his close friend, Miami-Dade lobbyist and businessman Rodney Barreto. Korge urged the judge to give Osorio a harsh sentence, saying Osorio’s crime “was nothing more than a disgusting fraud.”
Korge, a major Democratic fundraiser who came to know Osorio and his wife during the Clinton and Obama presidential campaigns, was not the only investor duped by the charismatic entrepreneur.
Others saw potential profits in Osorio’s new company, including NBA star Carlos Boozer, former Miami Heat center Alonzo Mourning, a Tanzanian businessman, a group of United Arab Emirates investors and a former Star Island neighbor.
Although Innovida had a manufacturing facility in North Miami-Dade, and prominent board members including former Gov. Jeb Bush and Miami condo king Jorge Perez, the company never gained traction.
Osorio was convicted of using Innovida, which claimed to produce high-tech building panels, to deceive investors and line his pockets. Osorio, represented by attorney Humberto Dominguez, pleaded guilty before U.S. District Judge William Dimitrouleas in Fort Lauderdale federal court in February. As part of his plea, the U.S. attorney’s office agreed to drop 19 other charges.
Before his indictment was returned last December, a bankruptcy judge ordered Osorio to sell a major asset that he and his wife, Amarilis, had purchased in 1997: their one-acre, two-story Star Island home with infinity pool, which was auctioned for $12.7 million.
Most of the sale proceeds from the heavily mortgaged property went to banks and other lenders. Osorio’s Innovida investors received $3.4 million of the balance, according to bankruptcy court records. Osorio and his wife were allowed to keep about $1.6 million.
In July 2012, the couple — parents of three children — paid nearly $924,000 for a four-bedroom, five-bathroom condominium in Aventura. Federal prosecutors eventually moved to seize the property as part of the criminal forfeiture against Osorio.
But his wife countered that move in court to preserve her interest in the condo, saying her portion of the purchase was not tainted by any fraudulent funds. The wife’s attorney, Scott Srebnick, persuaded prosecutors to let her keep her portion and pay the U.S. government $382,500 for her husband’s interest in the property. She now owns the Aventura condo outright..
In Osorio’s indictment, his wife is referred to as an “unindicted co-conspirator” who personally benefited from his business scam — although she is not identified by name.
Assistant U.S. Attorney Lois Foster-Steers decided not to prosecute Amarilis Osorio under an agreement that her husband plead guilty to criminal wrongdoing, according to court records.
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