Compliance July 13, 2017

EBSA Fraud Investigation Leads to Lengthy Prison Sentence

A Department of Labor investigation found evidence that $5 million, including retirement plan assets covered by ERISA, was inappropriately diverted and used to pay various business and personal expenses.

Reported by

John Manganaro

A fraud investigation by the U.S. Department of Labor’s Employee Benefits Security Administration, the FBI, and the Department of Health and Human Services’ Office of Inspector General has led to a 12-year prison sentence for William Jackson Moates Jr., of Fort Smith, Arkansas.

Moates pled guilty to a variety of charges in October 2016, but his sentence has now been handed down. The significant amount of prison time denotes the severity of the fraud charges.

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As EBSA explains, the investigation found that over the course of nearly five years, Moates, received investment funds from at least 25 different clients, which were not invested as he said they would be. In a variety of ways, Moates “diverted clients’ investments to his personal use, to pay back other investors, and for the use of his various businesses for operating expenses.” Further, EBSA investigators found that Moates had embezzled $150,000 from an employee benefit plan sponsored by a pool company.

EBSA Dallas Regional Office Director Deborah Perry says the severity of the prison sentence is completely appropriate: “Through the combined efforts of this department, the FBI, and Department of Justice prosecutors, this defendant is being punished in accordance with the law and has been ordered to pay restitution.”

EBSA says Moates used investor funds for a variety of ends—to renovate his home, take vacations, make credit card payments, make payments to personal iTunes and Amazon accounts, make contributions to local charitable organizations, and to make mortgage payments on his home.

“He would also use investor funds to make disbursements to other clients whose money he had embezzled,” Perry says.

On June 28, 2017, Moates was formally sentenced to 150 months in federal prison on one count each of mail fraud, theft of government funds, theft from an employee benefit plan, money laundering, and two counts of wire fraud. Moates was also ordered to pay restitution in the amount of $5,710,816 to his victims.

Additional information can be found at http://www.dol.gov/ebsa.