Baltimore, Maryland -Thomas M. DiBiagio, United States Attorney for the District of Maryland and Vicki S. Duane, Special Agent In Charge of the Baltimore Field Office, Internal Revenue Service Criminal Investigation, announced that Keith J. Osborne, age 62, of Annapolis, Maryland, was sentenced today to 18 months imprisonment by the Honorable Benson D. Legg of the United States District Court for the District of Maryland as a result of his earlier guilty plea to one count of filing a false income tax return. Mr. Osborne had been charged with that offense by a Criminal Information filed on March 21, 2002, and had pled guilty on April 11, 2002. Although Mr. Osborne pled guilty to one count related to tax year 1994, he acknowledged filing a false tax return for tax year 1995 as well, and his sentence was based on the tax due and owing for both years. Osborne admitted that between the two years, he failed to report approximately 2.2 million dollars of income with an additional tax due and owing of approximately $850,000.

According to a Statement of Facts presented at the guilty plea by Assistant United States Attorney Joseph L. Evans, Mr. Osborne invented a flexible gasoline piping system in 1988. After a patent dispute, Mr. Osborne received a patent for that system in 1994. Thereafter, Mr. Osborne entered into licensing agreements for the piping system in his own name and through the business entities that he owned. Through these contracts, Mr. Osborne personally received about 1.4 million dollars worth of stock in 1994 from another business entity that had contracted to use the piping system. In 1995, Osborne's businesses paid approximately $765,000 of his personal expenses. These funds were not reflected on Mr. Osborne's personal income tax returns for 1994 or 1995. For the years in question, Mr. Osborne failed to report personal income of approximately $1,443,000 in 1994, and $764,000 in 1995. The approximate additional tax due and owing for those years is $565,000 in 1994 and $286,000 in 1995.

Under the federal sentencing guidelines, Mr. Osborne was subject to a period of imprisonment of between 18 and 24 months. After considering psychiatric testimony from both defense and government witnesses, Judge Legg rejected a request by the defense to impose a lower sentence based on the claim that Mr. Osborne's failure to accurately report his income was a product of adult attention deficit/hyperactive disorder. In addition to the period of incarceration, Judge Legg also ordered that Mr. Osborne serve one year of supervised release following the prison sentence. He must also cooperate with the Internal Revenue Service in computing all of the back taxes, interest, and penalties.

The case was investigated by special agents of the IRS Criminal Investigation Division, Baltimore. It was prosecuted by Assistant United States Attorney Joseph L. Evans.