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Pocketing cash from an employee benefit plan is a federal offense

On Behalf of | Oct 24, 2023 | Federal Offenses

Employee benefit plans benefit everyone in a business organization. A group health plan provides medical care coverage for participating employees and their dependents. Meanwhile, a pension plan offers a source of income for retired workers based on their contributions while still employed.

However, some would try to misappropriate the funds used to pay for these benefits. Embezzling cash from employee benefit plans isn’t just any crime; it’s a federal offense. Anyone who faces charges for employee benefit plan theft can potentially pay heavy fines and years behind bars.

The law on embezzling employee benefit plans

According to federal rules, anyone who steals, embezzles or converts for their own use any of the money, credits, securities or assets of any employee benefit plan violates the law.

Those convicted of theft or embezzlement from an employee benefit plan face up to five years of prison. In addition, the convicted may be ordered to pay as much as $500,000 or twice the amount they defrauded from the plan, whichever is greater.

Why is employee benefit plan embezzlement a federal crime?

If these employee benefit plans are privately funded (either by employers for group health plans or by the employees themselves for pension plans), why is stealing from them considered a federal offense?

This is because of a federal law called the Employee Retirement Income Security Act (ERISA). Overseen by the Department of Labor and the Department of Treasury, ERISA sets standards for all benefits plans. Therefore, stealing from benefits plans violates federal law.

You shouldn’t underestimate federal criminal charges. Not only can a conviction for employee benefit plan theft lead to fines and prison, but it also leaves you with a criminal record. If you face charges, consider planning your defense for your court hearing.