In an effort to combat criminal abuses in contributory employee benefit plans, the Department of Labor’s Employee Benefits Security Administration (EBSA) initiated the Contributory Plans Criminal Project (CPCP) in 2010. Contributory retirement and health plans are vulnerable to criminal abuse in a number of ways, according to EBSA. Employers, who have authority over plans assets, sometimes divert plan funds to their own use or misapply contributions to pay for business expenses. Providers and others sometimes gain access to plan funds and siphon them off. And participant identities may be stolen allowing unscrupulous individuals to steal the accounts.
These kinds of crimes have long term implications for participants: hard-earned retirement savings may be lost, and legitimate medical claims may go unpaid. As of mid-November 2010, they had initiated 191 investigations, referred 97 investigations to prosecutors, obtained 20 indictments with seven guilty pleas, and restored $385,447 in plan assets.
For example, on March 22, 2010, the former accounts payable manager for one manufacturing company pled guilty to conspiracy to commit mail fraud, wire fraud, bank fraud and theft from an employee benefit plan based in Bloomington, Illinois (United States v. Hill).The manager failed to forward more than $200,000 in plan contributions that had been withheld from employee paychecks. Her actions, according to the CPCP, left the plans with roughly $140,000 in outstanding medical claims. Her actions were part of a much larger criminal conspiracy that defrauded banks and other lenders out of more than $213 million.
The DOL has published a list of ten warning signs employees covered by a contributory employee benefit plan can use to recognize the signs of potential fraud. It is available at the EBSA website.