Roadwork firm to pay $20M in workers’ retirement theft case
HARRISBURG, Pa. (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.
Glenn O. Hawbaker Inc. has agreed to have a court-appointed corporate monitor perform oversight, including of the process of returning the money to 1,267 victims.
“When we talk about big fights, this is what we mean,” Attorney General Josh Shapiro said at a Harrisburg news conference, a few hours after the plea hearing in Centre County. “Helping everyday Pennsylvanians take on the powerful and the well connected when they’ve been screwed.”
The company released a statement saying it was “pleased to bring this process to a conclusion” and avoid costly court proceedings, but it maintains it followed all fringe benefits rules. In pleading “no contest,” the company accepts the convictions but does not expressly admit it committed the crimes.
“The fringe benefit practices challenged by the Office of the Attorney General were based upon advice provided by the company’s former attorneys,” the statement read. “Hawbaker has always intended to properly pay all of its employees.”
A video played by Shapiro at the press conference featured retirees and other victims saying things at the company didn’t seem right and they had difficulty getting straight answers.
“These workers, they’re going to get their money back. This company is being held accountable,” Shapiro said.
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.
“I’ve heard directly from contractors across Pennsylvania that follow the law, that follow the rules, and they believe that this enforcement helps their honest businesses,” Shapiro said.
The 70-year-old company was charged after a three-year state investigation in April with four counts of theft by failure to make required disposition of funds.
Shapiro alleged when charges were filed that the family-run company engaged in a “massive, unprecedented fraud” and that its 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.
Hawbaker also falsely inflated the cost of health benefits to make it seem as if the company had met minimum per-hour payments under the state and federal prevailing wage laws, Shapiro said.
The restitution to be paid by the company covers 2015-18, which Shapiro said was the period of time under which charges could be filed without violating the criminal statute of limitations. Payments to current and former employees are expected to be made within four months.
An alert employee approaching retirement noticed discrepancies in his account and first reported Hawbaker.
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.