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News Release

President Of Bourne, Mass., Home Health Care Firms Sentenced In Criminal Wage & Paycheck Deduction Case

Archived News Release — Caution: Information may be out of date.

Scott Farrell, president of All Cape Health Care, Inc., All Cape Health Care Certified, Inc., and Larkin Management Corporation, of Bourne, Massachusetts, was sentenced today in Falmouth District Court to six months in the house of correction, suspended for two years, in a criminal case involving non payment of wages, failing to pay unemployment insurance taxes, failing to provide workers’ compensation coverage, and converting for his own use health insurance premiums deducted from employee paychecks.

According to James Benages, New England Regional Director for the U.S. Labor Department’s Pension & Welfare Benefits Administration (PWBA), the Massachusetts Attorney General’s Office pursued criminal charges against Farrell as a direct result of PWBA’s investigation into allegations that Farrell and his companies had withheld health insurance premium deductions from the paychecks of employees, and – instead of forwarding those premiums to the insurance company – had converted that money to their own use. Such actions are violations of the federal law governing the administration of private pension and employee benefit plans. They are also violations of Massachusetts state criminal larceny statutes, under which this case was prosecuted.

Around 37 employees were affected by Farrell’s illegal activities. All Cape Health Care, Inc., and All Cape Health Care Certified, Inc., provided home health care services to nursing homes and individuals based on contracts with Medicare, Medicaid and private payers. Both corporations employed home health care aides to care for elderly patients and clients. Larkin Management Corporation employed five staff members who provided administrative and financial support for the two corporations, including bookkeeper, office manager and company officers.

As part of a plea bargain, Farrell pled guilty to one count of petty larceny in connection with the misappropriation of the employee health insurance premiums, one count of failure to provide workers’ compensation , 37 counts of failure to pay wages, and one count of failure to pay unemployment taxes. He is required to repay to employees and health plan participants a total of $48,532.64 in health premiums, dental premiums, wages and unpaid medical claims. He is also required to pay $75,000 in unemployment taxes to the Commonwealth of Massachusetts. Should he fail to make these payments or in any other way violate his two year probation, Farrell will be incarcerated.

Said Benages, “This should be a warning to employers that when we discover them misusing employee benefit plan funds of any kind, we will pursue them to the bitter end. If, as in this case, we are not able to prosecute them under federal law, we will cooperate with state law enforcement officials to prosecute them under state law. The message is that no employer has the right to deduct money from an employee’s paycheck for insurance or pension purposes and then turn around and use that money for their own purposes.”

The case was prosecuted by Massachusetts Assistant Attorney General Daniel Field under the direction of Attorney General Tom Reilly. The U.S. Labor Department’s Pension and Welfare Benefits Administration enforces the federal Employee Retirement Income Security Act (ERISA) and other laws which govern the administration of private pension and employee benefit plans, including health insurance plans.

U.S. Department of Labor news releases are accessible on the Internet. The information in this news release will be made available in alternate format upon request (large print, Braille, audio tape or disc) from the Central Office for Assistive Services and Technology. Please specify which news release when placing your request. Call 202.693.7773 or TTY 202.693.7755.

Archived News Release — Caution: Information may be out of date.

Contact Name: John M. Chavez
Phone Number: 617.565.2075

Employee Benefits Security Administration
July 14, 1999
Release Number