Executives at benefits firm admit withholding money from employee accounts
08/12/2014 12:36 PM
08/13/2014 4:34 PM
Two executives at a Charlotte benefits consulting firm are no longer allowed to act as trustees of any employee benefit plan after federal officials said they withheld hundreds of thousands of dollars from their own employees’ retirement accounts.
The U.S. Department of Labor filed a federal suit earlier this year against Miles & Associates, accusing company President Michael Wayne Miles and Leon Stadther Jr. of failing to transfer payroll deductions into retirement accounts for 20 employees for nearly five years.
Miles & Associates maintains retirement plans for third-party clients that include manufacturing and software firms, according to the company’s website.
According to a consent order filed in May, Miles and Stadther admitted to the allegations and were directed to relinquish their roles as trustees over retirement accounts for Miles & Associates’ clients. The settlement does not remove them from their jobs or supervisory roles in the company, but it orders that other employees act as trustees for clients.
Miles declined to comment when reached this week, and efforts to reach Stadther were unsuccessful.
According to the lawsuit, Miles and Stadther, listed as the company’s treasurer in N.C. Secretary of State records, stopped transferring funds from employee paychecks to their retirement accounts in 2008.
Miles & Associates operates its own retirement plan and was responsible for dispersing funds into its employees’ 401(k) accounts by deducting contributions from their paychecks.
In 2011, Miles and Stadther stopped contributing to their own retirement accounts, court documents say. They withheld more than $270,000 in retirement contributions from employees between January 2008 and October 2012. They subsequently mingled the funds with the company’s own assets after bypassing the amount of time employers have to transfer payroll deductions into retirement accounts.
Federal law requires employers to transfer retirement plan contributions as soon as possible so those funds don’t mix with the company’s general assets, according to the Labor Department complaint.
The lawsuit states Miles and Stadther also failed to deposit at least $102,000 in loan repayments to their employees’ retirement plans “as soon as they reasonably could do so.” Miles & Associates employees were able to take out loans from assets accrued on their retirement plans.
That money too, prosecutors said, was “co-mingled” with the company’s general assets.
Last September, Miles signed an agreement with the Internal Revenue Service to terminate the company’s internal retirement plan, according to court documents. He then offset funds owed to the plan by using more than $580,000 from his personal plan account to cover loan repayments and matching employer contributions that were never placed into his employees’ respective accounts.
The U.S. Department of Labor filed suit earlier this year against Miles and Stadther and the company. The settlement was announced this week.
Lindsay Williams, a Labor Department spokesman, said employees had been repaid in full.
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