ERISA Insider Vol II., Ed XII: Cincinnati Businessman Ordered To Prison After Investigation By EBSA

Ron Craig Estes, sole owner of R&R Steel LLC was sentenced to serve 18 months in prison for defrauding workers of retirement benefits.

Dear Fiduciary,

Today we are here with Breaking News out of EBSA:

A federal judge in Cincinnati sentenced R&R Steel LLC Owner Ron Craig Estes to 18 months in prison following an investigation by the Employee Benefits Security Administration (EBSA).

Mr. Estes pleaded guilty on December 12, 2019 to one count of theft or embezzlement from an employee benefit plan and one count of mail fraud.

This comes on the heels of an investigation by the EBSA’s Cincinnati office which found Estes collected between $15,000-$40,000 from his company’s 401(k) plan. He used fraudulent signatures to obtain the money and used it for his personal benefit in direct violation of ERISA.

The investigators found Mr. Estes forged multiple signatures on distribution forms for the 401(k) plan for R&R Steel LLC. He then changed the addresses of plan participants to his and his company’s address.

Since Estes was the sole fiduciary, he was able to sign the distribution forms and collect the checks in which he forged the signatures of employees. He cashed these checks which were used for his personal use.

Estes targeted particular employees which he knew were likely not going to report the fraud and were unaware of legal action they could take. This included employees who were not proficient in English.

“Estes offered his employees a tangible benefit, and willfully stole retirement earnings from employees he knew were most likely not going to report the fraud or exercise their legal rights,” said EBSA Regional Director Joe Rivers in Cincinnati.

EBSA investigators also found Estes committed mail fraud when he sent an $800 company check in order to obtain 10 fraudulent OSHA training certificates. These were used to obtain a $450,000 subcontract to perform commercial development work in Cincinnati potentially causing significant safety hazards.

Joe Rivers continued by saying, “He further compromised the safety of his employees and others on a Cincinnati commercial development by falsifying documents. The U.S. Department of Labor is a guardian of worker’s rights and will continue to pursue employers who violate the law.”

Federal Judge Timothy Black ordered Estes to forfeit $25,000 to the US Government and to pay restitution to the affected plan participants. Estes will also have to pay an assessment fee of $200 in addition to 3 years of supervised release after his prison sentence concludes.

This case goes to show that EBSA is actively looking for violations and non-compliance with ERISA. In this particular case the actions were deliberate, but even those with good intentions can make mistakes which can lead to enforcement actions. This is why it’s critical to have an independent fiduciary which can design and guide your ERISA covered health plan.

Prevent ERISA Violations By Hiring An Independent Fiduciary

At ERISA Advisory Group we have been helping business with ERISA compliance since 1995. Our founder and president, William Kropkof, CEBS, was a former investigator at the Department of Labor for 7 years tasked with investigating Health & Welfare and Retirement Plans.

We are uniquely qualified to design your ERISA plan and maintain compliance with changing laws and regulations. We know how to find ERISA compliance issues and we know how to prevent and correct them.

If you are looking to hire an independent fiduciary that can take on your fiduciary responsibilities, then schedule a free consultation today to see how we can help you find and correct compliance issues before the EBSA does.

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