The former CEO of a Pennsylvania trucking company is facing hundreds of criminal charges related to wage theft scheme involving the employees’ 401(k) plans.
Timothy Kephart, 55, of Morrisdale, is already serving a 30-month sentence in federal prison for a conviction in an unrelated check-kiting scheme in Ohio. The criminal charges center around a scheme that purportedly lasted from June 2010 to late 2013, whereby employee withholdings that should have been used for 401(k) contributions, 401(k) loan repayments and medical insurance coverage were instead deposited in the company checking account and used for other expenses. The amount of funds misappropriated is alleged to be in excess of $329,000.
As a result of the company’s failure to pay medical insurance premiums, the insurance company retroactively canceled the insurance coverage, which caused a number of employees to be responsible for their medical bills, according to a news release issued by the Clearfield County (Pa.) District Attorney’s Office. It was also determined that several employees were not paid for days of service as well as unused and used vacation pay. The investigation revealed at least 131 victims, who reported that Kephart “acknowledged the missing funds and assured everyone that they would be paid back,” the release stated.
The criminal charges are not the first time Kephart has been brought to court over the pension plans. In September, Timothy Kephart and fellow Kephart Trucking executive David Kephart each reached consent agreements in a civil suit brought by the U.S. Department of Labor to repay more than $254,000 in funds that were pilfered from employee pension plans. The District Attorney’s office cited the “substantial investigation” by Pennsylvania State Police and the Department of Labor playing a key role in the filing of criminal charges.
Timothy Kephart’s federal prison sentence stemmed from his conviction in a $3.6 million check-kiting scheme involving Dart Trucking of Columbiana, Ohio, not to be confused with Dart Transit Co. of Eagan, Minn.
Kephart, who was serving as chief executive officer for Dart Trucking, as well as two other executives were found guilty of conspiring to commit bank fraud.
According to court documents, the trucking company executives participated in an elaborate check-kiting scheme, setting up five accounts and “floating” worthless checks from one bank account to another at Huntington Bank in Columbiana from October 2007 to February 2010.
Staff Writer Clarissa Hawes contributed to this report.
Copyright © OOIDA