2 plead guilty in diverting $12M from U.S. Air Force contract

Oct. 10 (UPI) — Two businessmen have pleaded guilty to diverting $12 million dollars away from an Air Force contract to pay for personal and unrelated business expenses, the Justice Department announced Thursday.

Thomas D. Burns, 74, and Daniel B. Tolley, 63, face up to 10 years in prison for theft of government property.

The men founded SP Global Inc. in 2012. SPGI was a business designed to help develop autonomous technologies for the Air Force. But instead of operating like a typical government contractor, Justice Department officials said, SPGI relied on “advanced payments” from the Air Force. Those payments “allowed SPGI to pay for research efforts in a faster, commercial-like manner,” the Justice Department said.

Records show that between March 28, 2019, and June 23, 2020, the USAF and the Air Force Materiel Command made a total of $27,250,000 in advance payments to SPGI, the accounting for which was overseen only by Burns and Tolley. The payments were intended to be held in trust and used to pay sub-recipients.

But documents show that from January 16, 2020, through Aug. 28, 2020, Tolley transferred $11,878,000 from SPGI bank accounts to SPG’s business account.

“The money was used to cover SPG payroll, SPG business expenses, to discharge personally guaranteed debts, and to pay tens of thousands of dollars to Burns and Tolley,” the Justice Department said.

More than $300,000 of the money went to pay Tolley and Burns’ credit card bills.

In July, 2020, SPGI failed to pay their subcontractors for their work and in September a $3,000 check that Tolley wrote to a subcontractor bounced, setting off concerns about SPGI’s viability and ultimately led to the discovery of the converted $12 million.

Tolley blamed “significant accounting issues” that would be quickly remedied and claimed the subcontractors would be paid when investment money from overseas arrived, which never happened.

Tolley pleaded guilty on July 10 and is scheduled to be sentenced on Nov. 14. Burns pleaded guilty Thursday and is scheduled to be sentenced on Jan. 30, 2025, the Justice Department said.