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Archived News Release--Caution:
information may be out of date.
For more information call: (202) 219-7316
Secretary of Labor Robert B. Reich said today that a
guilty plea entered today in a New York federal court shows that employers who
steal from their workers' 401(k) retirement plans will face criminal
penalties.
Reich's comment came after Ralph Corace, the former owner
of Job Shop Technical Services, Inc. in Farmingdale, N.Y. pleaded guilty to
embezzling $2.7 million from his workers' 401(k) plan. He agreed to pay full
restitution to the plan. The embezzled funds represented contributions deducted
from the salaries of about 300 workers.
"We want to make sure that money set aside for workers'
retirement and health benefits is not misused for personal and corporate gain,"
said Reich. "This action sends a loud message that white collar crime against
plans and workers does not pay."
Today's guilty plea represents the largest case thus far
in a nationwide anti-fraud campaign started last year by DOL's Pension and
Welfare Benefits Administration (PWBA), which oversees federal laws governing
private pensions.
The program is designed to eliminate misuse of employee
contributions to pension and health plans. Under the program, $8.76 million has
been recovered to date for workers covered by 401(k) plans, not including the
Corace funds.
PWBA Assistant Secretary Olena Berg commended "the
combined efforts of federal law enforcement agencies to combat 401(k) fraud.
These combined efforts are netting positive results for workers who have been
victimized by white collar criminals."
Both the civil and criminal cases resulted from an
investigation conducted by the New York Regional Office of PWBA. The U.S.
Attorney's Office in Hauppauge, N.Y. prosecuted the criminal case.
Corace pleaded guilty to felony charges and was arraigned
in federal court in Hauppauge, N.Y. on charges that he intentionally embezzled
plan money while serving as the company's 401(k) trustee.
He faces a maximum penalty of five years in prison and a
$250,000 fine.
Job Shop operated as a nationwide employee leasing company
for engineers and consultants. The company was purchased by International
Technical Services, Inc., located at 1175 Walt Whitman Road, Melville, New
York.
In a parallel civil case, the department is suing Corace
for failing to deposit employee contributions into the 401(k) plan. The
department seeks return of the misused contribution, removal of Corace and Job
Shop from their positions with the plan and to permanently bar them from
service to any plan governed by federal pension law. That suit is still
pending.
Archived News Release--Caution:
information may be out of date.
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