HARRISBURG, PA (AP) – A major Pennsylvania contractor was accused Thursday of stealing tens of millions of dollars from his own workers by systematically violating applicable state and federal wage laws for taxpayer-funded public infrastructure projects.
State College’s Glenn O. Hawbaker Inc., a 70-year-old company that completed $ 1.7 billion in government transportation construction contracts between 2003 and 2018, was charged with four thefts.
The state’s chief prosecutor called it a “massive, unprecedented fraud” and the largest case of its kind at the national level.
“The guys who did the groundbreaking work on the streets of Pennsylvania had their retirement stolen to get 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, “While we believe we have always acted in accordance with all state and federal laws, the company immediately changed its prevailing wage practices” upon learning of the Attorney General’s investigation.
The company said it will “continue to do what is right for our employees past and present” and seek a “rapid resolution” of the case. Shapiro said Hawbaker is cooperating.
The attorney general said Hawbaker stole more than $ 20 million from employee fringe benefits like retirement and health insurance to use the money to improve bottom line, undercut competitors, and fund internal projects and company rewards.
The family-run company “has fled workers to put more money back in their pockets,” Shapiro said. “They defrauded the taxpayers who ultimately paid for these projects and given honest companies a fair shot at these deals.”
Between 2015 and 2018, according to an affidavit of the likely cause, Hawbaker diverted more than $ 15 million in employee pension contributions subject to applicable wage laws to fund retirement contributions for all employees of the company, freeing up each employee’s retirement account ten years leave thousands of dollars short.
Hawbaker also artificially inflated the amount he spent on health and social benefits for insured employees and used the money to subsidize benefits across the company, the affidavit said.
Prosecutors said the company appeared to have dealt with these practices for decades, but the deadlines for criminal complaints limited the allegations to the past five years. A keen-eyed employee nearing retirement noticed an inconsistencies in his account and reported Hawbaker to the state, leading to a three-year investigation.
In a sworn affidavit, investigators said the company blamed bad advice from a former corporate attorney for its decision to use applicable fringe benefit money to pay benefits to all employees, including owners and executives.
The company’s business practices changed after a 2018 search at corporate headquarters. According to the affidavit, the pension money will now be paid directly into the individual pension accounts of the employees. The company now also excludes internal administrative costs and other improper expenses when adding up health and social expenses.
The 1,200-employee company was founded in 1952 and has offices in Pennsylvania, Ohio and New York. It builds roads and bridges, produces asphalt and aggregates, operates quarries and provides engineering services.