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Courts & Justice

Roadwork Firm To Pay $20M In Workers' Retirement Theft Case

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Matt Rourke
/
AP

A major Pennsylvania heavy equipment contractor entered no contest pleas to four theft counts on Tuesday and agreed to pay restitution of more than $20 million over allegations it illegally diverted pension money and other benefits from its workers.

The Centre Daily Times reported that Glenn O. Hawbaker Inc. vice president Michael Hawbaker said at the plea hearing that the company was also agreeing to have a court-appointed corporate monitor perform oversight.

State prosecutors submitted 250 victim impact statements and told the sentencing judge that the company's illegal actions affected more than a thousand workers, cutting into their retirement funds, the newspaper said.

A public relations company working with Hawbaker’s attorney said a statement would be issued later Tuesday. In pleading “no contest,” the company accepts the convictions but does expressly admit they committed the crime.

Hawbaker, based in State College, is an excavation, highway construction and quarry business that booked $1.7 billion in state transportation construction contracts between 2003 and 2018.

The 70-year-old company was charged in April after a three-year state investigation with four counts of theft by failure to make required disposition of funds.

Attorney General Josh Shapiro alleged when charges were filed that the family-run company engaged in a “massive, unprecedented fraud” and that their workers “had their retirements stolen from them” to enrich company executives.

Shapiro's office charged Hawbaker with stealing more than $20 million from workers’ fringe benefits such as retirement and health insurance and using that money to pad its profits, undercut competitors and pay for internal projects and company bonuses.

An affidavit of probable cause claimed that over 2015-18, Hawbaker diverted more than $15 million in retirement contributions meant for workers subject to the prevailing wage laws for government projects to fund pension contributions for all of its employees. That left individual workers’ retirement accounts tens of thousands of dollars short, the attorney general's office said.

An alert employee approaching retirement noticed discrepancies in his account and reported Hawbaker. Investigators said the company blamed bad advice from a former company lawyer for the decision to use prevailing wage fringe benefits money to pay benefits for all employees.

The company’s practices changed after a 2018 search at its corporate headquarters. Pension money is now deposited directly into workers’ individual retirement accounts, according to the affidavit.

Hawbaker, founded in 1952, has 1,200 workers and facilities in Pennsylvania, Ohio and New York.