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).
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.”
here for the original article from Plan Sponsor.