Statements Tip Off 401(k) Embezzlement Scheme

It pays to pay attention to those 401(k) statements.

That was the first clue that employees of employees of PCI, a building cleaning service, and CDM, a construction and property management service, had that something was awry with how their 401(k) plan was being (mis)managed.

Brenda Wood, 48, the president and owner of the two firms (and several others as it turns out, though they were not involved in the 401(k)) has pleaded guilty to a federal charge of theft from an employee benefit fund.

In November 2010, the PCI Building Services 401(k) was set up with Nationwide. A month later Wood gave her bookkeeper the list of employees who wanted to participate and how much they wanted to contribute, and beginning in February 2011, those contributions were withheld from workers’ paychecks.

However, when the Dec. 31, 2011 statements arrived, they showed no contributions deposited into worker accounts, and somewhere around May 31, 2012, Wood’s bookkeeper provided her with a reconciliation showing that contributions were, in fact, missing from the 401(k) plan. According to the plea agreement, confronted by several employees about the situation, Wood told them that those funds were in escrow with Nationwide (they weren’t), although she had used them for her own benefit.

Wood also blamed her accountant for embezzling as much as $1.2 million from her company, and claimed to have filed a police report to that effect when: (a) it never happened; and (b) she never did. She did file a bar complaint with the Office of the Disciplinary Administrator against a former employee, claiming that that employee was responsible for the administration of the plan, when in fact Wood was the plan trustee and ultimately responsible as the 401(k) plan administrator.

While the maximum sentence is not more than 5 years of imprisonment, a $250,000 fine, 3 years of supervised release and a $100 mandatory special assessment, the plea agreement calls for 2 years of supervised release, no fine, restitution of at least $50,000, the $100 mandatory special assessment and withdrawal of Wood’s motion for a speedy trial.

The U.S. Attorney’s Office did not specify the amount stolen. Sentencing is set for Oct. 24.

Not that this is the end of Wood’s legal troubles; a separate trial is set for Dec. 5 on 21 other counts, including bank fraud, aggravated identity theft, wire fraud and committing a felony while on supervised release.

Wood made headlines in 2010 for her part in a failed attempt to purchase the iconic New York Life building in downtown Kansas City.

Add Your Comments

One Comment

  1. Marjorie Taylor
    Posted July 17, 2017 at 1:30 pm | Permalink

    This person belongs in prison. What kind of message does this send to other plan administrators, that they can steal the participants’ money and get a couple years’ probation? Here’s hoping the bank/wire fraud charges carry a little more weight.

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