BOSTON (TheStreet) -- The U.S. Labor Department is redoubling efforts to crack down on employers who bilk retirement and health plan participants out of their contributions.
In a growing number of cases, workers have had contributions to their pension or health plans withheld from paychecks but not deposited to the plans by employers. Instead, the employers keep the contributions and use them for their own purposes.
, announced this week, is the agency's first criminal national enforcement project targeting people who commit fraud and abuse against participants and beneficiaries of contributory employee benefit plans.
The initiative builds on coordinated national enforcement efforts focused on 401(k) abuses dating back to 1995. That year, 95 civil cases were closed, resulting in seven criminal indictments and 34 other punitive actions and recovering $1.3 million.
Last year, 1,042 civil investigations were closed, 910 with corrected violations. The Labor Department recouped nearly $18 million nationwide throughout the fiscal year.
Among the larger cases investigated and resolved last year:
On Sept. 3, 2009, Barry R. Stokes -- president and CEO of 1 Point Solutions, a Tennessee firm that provided administration services to 401(k) plans -- was sentenced to 151 months of imprisonment and ordered to pay $19.9 million in restitution. The firm collected employee contributions for 401(k)s, but Stokes used it for his personal and business purposes, including buying an extensive Japanese art collection. The total amount of the amount of funds Stokes embezzled exceeded $14 million.
On July 22, 2009 Mark Harrington -- vice president and controller at Anchor Capital Advisors and plan administrator for its 401(k) -- was sentenced to two years in prison and ordered to pay back $349,870. In April, Harrington pleaded guilty to embezzlement from an employee pension fund. As plan administrator, he directed the custodians of plan assets to make distributions totaling nearly $387,000 to fictitious entities set up at various banks by a relative. Harrington used the money to buy a home, a Cadillac Escalade, jewelry and breast implants -- presumably not for himself -- and other items.
On Sept. 21, the U.S. Department of Labor filed a civil complaint alleging that executives of Journey Electrical Technologies, a Laguna Hills, Calif., company, failed to collect more than $920,000 in employee and employer contributions for 401(k) plans from some 264 employees.
And on Nov. 16 the Labor Department said it had sued Fathalla M. Mashali, owner and president of the now bankrupt Northern Rhode Island Anesthesia Associates and its subsidiaries, for failing to forward more than $6 million in contributions plus interest owed to the company's pension plan.
-- Written by Joe Mont in Boston.
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