Business Owner to Serve Prison Time for 401(k) Plan Embezzlement

A multi-agency investigation found that from approximately May 2011 through August 2012, the business owner unlawfully embezzled and converted approximately $31,403 in deferred contributions from employees.

The U.S. District Court for the District of Kansas has sentenced business owner Brenda Wood to serve 50 months of imprisonment followed by an additional five years of supervised release, and to make more than $4.3 million in restitution for bank fraud and violations of the Employee Retirement Income Security Act (ERISA).

Get more!  Sign up for PLANSPONSOR newsletters.

Wood previously pleaded guilty to two counts of bank fraud and one count of theft from an employee benefit plan.

Wood owned Professional Cleaning and Innovative Building Services Inc. (PCI), a commercial cleaning services company in Kansas City, Missouri, as well as four Bonner Springs, Kansas, businesses: Commercial Development and Management LLC (CDM), Action Real Estate Services LLC, G&W Investments LLC, and Riverview Crossings LLC. In November 2010, she established the PCI Building Services Inc. 401(k) plan for the retirement benefit of employees of PCI and CDM.

A multi-agency investigation found that from approximately May 2011 through August 2012, Wood unlawfully embezzled and converted approximately $31,403 in deferred contributions from employee salaries. The court-ordered restitution includes $69,000 in employee and matching employer contributions, as well as lost earnings due to the 401(k) plan, and approximately $4.3 million for fraudulent loans and identity theft.

Wood assured employees who confronted her about missing 401(k) contributions that Nationwide Life Insurance Company held their funds in escrow when, in fact, she had already used their contributions for her own benefit without their permission, the Department of Labor (DOL) says. Wood also falsely accused her company’s accountant of embezzlement, and falsely claimed her former in-house counsel and human resources manager were responsible for the 401(k) plan. In addition, she made false statements to Farmers Bank and Trust of Great Bend, falsely claiming PCI had received a contract for cleaning services at an Internal Revenue Service (IRS) facility in Kansas City, Missouri, when the company failed to make the final round of bids. Based on her statements, the bank extended a $350,000 line of credit on which Wood submitted draw requests, stating that she needed the funds to fulfill the IRS contract.

“Fraudulent transactions like these have a severe impact on companies and individuals,” says DOL Employee Benefits Security Administration (EBSA) Regional Director Jim Purcell. “The actions can cause irreparable damage to the retirement savings of individuals and their future financial security.”

Most Employees Working to Live

"When employees can enjoy their personal lives alongside work responsibilities, they are happier and less stressed and bring their best efforts to the job," says Paul McDonald, senior executive director for Robert Half.

Nearly three-quarters (74%) of employees polled by global staffing firm Robert Half said they’ve achieved a good to excellent work-life balance.

 

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

Professionals in Nashville, Denver, Atlanta, Cincinnati, San Diego and Raleigh reported the most dissatisfaction in their work-life balance. Employees in Chicago, Houston, Los Angeles, Miami, New York and San Francisco scored the highest marks. According to prior Robert Half research linking happy workers with higher productivity and increased loyalty, employees who felt they achieved symmetry between work and home were two times more likely to be happy on the job compared to those who reported they didn’t.

 

In the current research, 39% of employees think their companies are responsible for work-life balance. But in a separate survey, 26% of business leaders said they believe achieving that balance is primarily the employee’s concern.

 

“When employees can enjoy their personal lives alongside work responsibilities, they are happier and less stressed and bring their best efforts to the job,” says Paul McDonald, senior executive director for Robert Half.

 

Robert Half offers ideas for employers to offer work-life balance options.

«