An asbestos removal company pleaded guilty in connection with an illegal “double breasted shop” scheme aimed at enabling them to defraud the Massachusetts Laborers Benefit Fund (MLBF), Burlington, Massachusetts. In this case, the company used a second corporate entity to pay union members at non-union rates without union benefits.
AQE Inc. of Windham, New Hampshire, pleaded guilty to 18 counts of mail fraud, one count of benefit fund embezzlement and 18 counts of filing false documents with an Employee Retirement Income Security Act (ERISA) fund, after being indicted in January 2016. U.S. District Court Judge Patti B. Saris scheduled sentencing for May 4, 2017.
AQE Inc. employed members of the Tewksbury, Massachusetts, Local 1421 of the Laborers International Union of North America. It paid members of Local 1421 for jobs which required union participation from the AQE Inc. payroll, which was a union signatory corporation. When the jobs did not require a union signatory company, union members were paid from the payroll of Air Quality Experts Inc.—a separate entity used as part of AQE Inc.’s single business. In these instances, union members did not receive union rates, and benefits were not paid by AQE Inc. to the MLBF, which provides medical and pension benefits to 8,000 laborers and their families in Massachusetts.
AQE Inc. sent “remittance reports” to the MLBF, which failed to report thousands of hours worked by members of Local 1421. By significantly under reporting the hours worked by union members, AQE Inc. failed to pay hundreds of thousands of dollars to the MLBF.
AQE Inc. has agreed to pay $500,000 in restitution to the MLBF as part of the plea.
The charging statutes each provide for a sentence of at least one year, and no greater than five years of probation, a fine of $500,000 ,or twice the loss or gain from the offense, and restitution.