Connecticut construction exec sentenced to prison for defrauding employees out of $3.4M | Dump Trucks Charlotte NC
Columbus Ohio Dump Truck Company Brief:
- The owner of two Plainville, Connecticut-based construction companies has been sentenced to 20 months in federal prison for money laundering after pleading guilty to deducting $3.4 million of sham pension administrative fees from his employees' paychecks and diverting the cash for his own use through two shell companies.
- The fraud affected 300 employees of Ferguson Electric and Ferguson Mechanical.
- Between 2013 and 2017, Lee Ferguson ordered that between $1.65 and $3.15 be deducted from employee paychecks for every hour worked. The funds were then routed through two other companies he established and controlled, TPA of Connecticut and DJS Associates in Florida.
- Ferguson, who has already made full restitution to his employees, must surrender to the U.S. Marshals Service on April 28 to begin serving his sentence and must also pay a fine of $200,000. After Ferguson has served his sentence, he must complete a 12-month period of supervised release.
Dump Trucks Columbus OH Insight:
The money laundering offense also included mail fraud, which Ferguson committed when he used the U.S. Postal Service in the transfer of the illicit funds, according to the plea agreement. The judge could have sentenced him to 20 years, which is the maximum penalty for the offense, mandated that he serve three years of supervised release or levied a fine of $500,000, However, as noted in the plea agreement, prosecutors recommended lighter punishments since Ferguson expressed a willingness to accept full responsibility for his actions and agreed to be truthful about his financial condition and regarding other questions asked during the sentencing process.
A statement sent to local media on behalf of Ferguson said that he has given up all interest in both the electrical and mechanical companies. His spokesman also said Ferguson acted alone and no one else at the two companies knew what he was doing.
The types of employer actions that result in charges of wage theft aren't usually so blatant as Ferguson's. Common infractions include failure to pay rates required by prevailing wage laws, not paying unions benefits, bouncing checks and misclassifying workers as independent contractors, in effect, cheating them out of earned overtime, workers' compensation protection, unemployment pay and other benefits.
A brief published by Washington, D.C., Attorney General Karl Racine noted that when misclassified workers in the district receive 90% of the wage that legitimate employees receive, contractors' costs can fall by as much as 16.7% to 27%. If a misclassified worker receives only half of the fringe benefits to which he or she is entitled, then the contractor can save between 16.7% and 48.1%.
Racine is a vocal opponent of those companies that do not abide by labor and wage laws. Earlier this month, he announced that his office had reached a $2.75 million settlement with Florida electrical contractor Power Design, which Racine said violated wage laws by misclassifying, along with two alleged labor brokers, about 500 workers. This is the largest wage enforcement action in Washington, D.C., history.