Another Awful Example of 401k Fraud

Ill-gotten gains spent on beauty supplies in Las Vegas, resorts in Florida and pool renovations, according to court documents

401k, fraud, embezzlement, retirement plansSentencing set for Oct. 9.

An industry obstacle to higher 401k participation is the worry on the part of employees that their salary deferrals are “shoved in the boss’ desk drawer.”

The fear was realized in the recent case of an Ohio business executive convicted on six charges related to embezzling $126,000 from an employee retirement fund and collecting nearly $860,000 from his employees—but not paying the money to the IRS.

C. David Snyder, 61, is scheduled to be sentenced Oct. 9, according to the United States Attorney’s Office for the Northern District of Ohio. He was convicted on one count of embezzling from an employee pension fund and five counts of failure to pay over taxes.

He was acquitted on two tax charges.

Snyder served as chairman, president and chief executive officer of Attevo, Inc., a technology consulting company headquartered in Cleveland. He also served as chairman and primary shareholder at Ruralogic, Inc., headquartered in Bryan, Ohio.

The U.S. Attorney said Attevo employees prepared financial records and schedules, quarterly and annual returns and reports for Attevo, at Snyder’s direction. Snyder ranked Attevo’s payables in order of importance, according to court documents.

Snyder, on behalf of Attevo, and the IRS in 2011 agreed to a monthly payment plan of $48,350 per month to repay the company’s outstanding payroll tax liabilities. Attevo made 10 payments totaling $483,500 then made no further payments, according to court documents.

Snyder withheld payroll tax from employees but neglected to pay it to the IRS. Snyder failed to pay over approximately $328,355 of employees’ portion of payroll taxes in 2010 and approximately $530,778 in 2012, according to court documents.

Snyder created a 401k and profit-sharing plan for Attevo employees in 2009. Ruralogic was added to the plan in 2010. The plan was funded through employee payroll deferrals. Between 2010 and 2012, Snyder failed to pay into the plan approximately $126,000 in contributions and loan repayments withheld from Attevo and Ruralogic employee wages, according to court documents.

During the time of his criminal conduct, the jury found, instead of paying Attevo’s employment taxes, Snyder paid $20,000 per month for the rental of a personal residence and his vacation home, leases on four vehicles and other personal expenses, according to trial testimony and court documents.

He also used Attevo’s American Express to pay personal expenses, including women’s clothing at Ann Taylor, Nieman Marcus and other stores, beauty supplies at Oro Gold in Las Vegas, travel to resorts in Florida and for pool/spa renovations, according to trial testimony and court documents.

Snyder earned income from Attevo totaling approximately $1.6 million between 2009 and 2012, according to the court documents and trial testimony.

“A jury found this defendant embezzled money from his employees,” U.S. Attorney Justin Herdman said in a statement. “He also took taxes out of their paychecks, but instead of paying the taxes of the IRS, he used the stolen money to pay for his vacation home, pool renovation and otherwise fund his own lavish lifestyle.”

“Charles Snyder embezzled retirement savings from his employees’ 401k accounts, and used the money for his personal benefit,” added James Vanderberg, Special Agent-in-Charge, Chicago Region of the U. S. Department of Labor Office of Inspector General. “We will continue to work with our law enforcement and other partners to protect retirement assets covered by the Employee Retirement Income Security Act.”

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