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Compliance August 28, 2014
Company Owner Pleads Guilty to Falsifying ERISA Disclosures
August 28, 2014 (PLANSPONSOR.com) - The owner of a
Maryland electrical contracting company pleaded guilty to falsifying plan
documents to avoid making contributions to several employee benefits plans.
Reported by Jill Cornfield
Michael E. Sewell admitted that the union agreement between his company, MESCO Inc., and the International Brotherhood of Electrical Workers Local 24 required him to make monthly contributions to seven employee health, welfare and pension benefit plans, and to file monthly remittance reports with the administrators of those plans. Sewell pleaded guilty to falsifying disclosure documents required under the Employee Retirement Income Security Act (ERISA) by intentionally under-reporting hours worked by employees to avoid contractually required contributions to the plans.
Beginning in January 2009, Sewell began paying some wages earned by MESCO employees from the payroll of a second company he owned, Michael E. Sewell and Associates Inc., and failed to report those wages in monthly remittance reports to the administrator of the benefit plans. In addition, Sewell failed to make the required contributions to the employee benefit plans for those unreported wages. As a result, Sewell failed to contribute more than $199,000 to the plans.
Eight plaintiffs, including seven multiemployer benefit plans and one labor union, filed suit against MESCO and Michael E. Sewell & Associates. In February, a court awarded the plaintiffs more than $450,000 in unpaid contributions, interest and liquidated damages.
Sentencing is scheduled for October 30.
The court opinion from February can be read here.