Construction firm accused of stealing $20M from workers
HARRISBURG, Pa. (AP) — A major Pennsylvania construction contractor was charged Thursday with stealing tens of millions of dollars from its own workers by systematically violating state and federal prevailing wage laws on taxpayer-funded public infrastructure projects.
Glenn O. Hawbaker Inc. of State College, a 70-year-old company that booked $1.7 billion in state transportation construction contracts between 2003 and 2018, was charged with four counts of theft.
The state’s top prosecutor called it a “massive, unprecedented fraud” and the largest case of its kind nationally.
“The guys doing the backbreaking work on Pennsylvania’s roadways had their retirements stolen from them in order to go into the pockets of the C-suite executives,” Attorney General Josh Shapiro said at a news conference. He said there were thousands of victims.
Hawbaker said in a written statement that “while we believe that we have always acted in accordance with all state and federal laws, in an abundance of caution, the company immediately changed its prevailing wage practices” after learning of the attorney general’s probe.
The company said it will “continue to do what’s right for our employees, both past and present,” and seeks a “swift resolution” of the case. Shapiro said Hawbaker is cooperating.
The attorney general’s office said Hawbaker stole more than $20 million from workers’ fringe benefits such as retirement and health insurance, using the money to pad its bottom line, undercut competitors, and fund internal projects and company bonuses.
The family-run company “fleeced workers in order to put more money back into their pockets,” Shapiro said. “They defrauded taxpayers who ultimately paid for these projects, and cost honest companies a fair shot at these bids.”
Between 2015 and 2018, according to an affidavit of probable cause, Hawbaker diverted more than $15 million in retirement contributions meant for workers subject to the prevailing wage laws to fund pension contributions for all of the company’s employees, leaving individual workers’ retirement accounts tens of thousands of dollars short.
Hawbaker also artificially inflated the amount it was spending on covered employees’ health and welfare benefits, using the money to subsidize benefits for the entire company, the affidavit said.
Prosecutors said the company has apparently engaged in these practices for decades, but time limits for criminal charges limited the allegations to the past five years. A sharp-eyed employee approaching retirement noticed discrepancies in his account and reported Hawbaker to the state, prompting a three-year investigation.
In an arrest affidavit, 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, including the owners and executives.
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. The company also now excludes internal administrative costs and other impermissible expenses when tallying up health and welfare expenditures.
The company, which has 1,200 workers, was founded in 1952 and has facilities in Pennsylvania, Ohio and New York. It builds roads and bridges, produces asphalt and aggregate materials, runs quarries and provides engineering services.