Already in federal prison for an unrelated check-kiting scheme, the former CEO of a Pennsylvania trucking company has been remanded to state authorities to face trial on hundreds of criminal charges related to a wage theft scheme involving employees’ 401(k) plans.
Timothy Kephart, 55, of Morrisdale, was served a warrant by Pennsylvania State Troopers on Jan. 12 while in federal prison. The warrant authorized Kephart to be remanded from federal custody to the state’s custody while he is tried in connection with the misappropriation of more than $329,000 of employee withholdings while he was the chief executive of Kephart Trucking Co. The trial will take place in Clearfield County, where a judge set Kephart’s bail at $250,000 cash. A preliminary hearing has been set for Jan. 21.
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.
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 district attorney also announced that the investigation determined that Kephart is alleged to have used diverted business funds for personal use including the construction of a $300,000 barn located at his residence.
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.
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.
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