Three accuse Hawbaker of employment benefit failure
WILLIAMSPORT — A big Pennsylvania highway contractor has been accused by former employees of failing to make millions of dollars in required contributions to its retirement and other benefit plans over the past nine years.
Three former employees of Glenn O. Hawbaker Inc. of State College allege violations of the Employee Retirement Income Security Act (ERISA) in a suit filed Wednesday in U.S. Middle District Court.
The complaint, which seeks certification as a class action, is related to the criminal charges filed by the state attorney general’s office that alleged the illegal diversion of pension money and other workers’ benefits.
The criminal case was resolved in August in Centre County when Hawbaker pleaded no contest to four theft counts and agreed to pay restitution of more than $20 million.
It also agreed to have a court-appointed corporate monitor perform oversight, including of the process of returning the money to 1,267 victims.
The company stated by pleading no contest it accepted the convictions but did not expressly admit to committing the crime.
“The fringe benefit practices challenged by the Office of the Attorney General were based upon advice provided by the company’s former attorneys,” a statement read. “Hawbaker has always intended to properly pay all of its employees.”
Lester Packer Sr. of Trout Run and Lester Packer II and Shawn Dyroff, both of Jersey Shore, allege in their suit the company, its board of directors, up to 20 of its members identified as John Does and the benefit plan administrator failed to perform their fiduciary duties.
As of Dec. 31, 2019, the plan had 1,490 participants and assets exceeding $151 million, the document states.
It notes forensic accountants retained by the state attorney general’s office found between 2015 and 2018 Hawbaker stole just under $20.7 million of prevailing wage workers’ fringe benefit money.
The plaintiffs cite other financial data from the criminal case in support of their contention the plan incurred losses due to excessive costs and lower net investment returns.
“Had defendants complied with their fiduciary obligations, the plan would not have suffered these losses and participants would have had more money available to them for their retirement,” the complaint claims.
The suit seeks a declaration the defendants breached their fiduciary duties under ERISA, an order compelling them to make the plan whole and damages in the amount of any losses.
Attorney General Josh Shapiro charged the 70-year-old family-run company in April after a three-year investigation.
He alleged then Hawbaker engaged in a “massive, unprecedented fraud” and their workers “had their retirements stolen from them” to enrich company executives.