LARGO — Local business owner Nathan Williams, owner of NW Systems, Inc., pleaded guilty to one count of theft or embezzlement from his company’s employee benefits plan and was sentenced to one year and one day in prison on Sept. 18.
Williams’ sentencing comes after an investigation by the U.S. Department of Labor’s Employee Benefits Security Administration and the U.S. Department’s Office of the Inspector General, which determined that he failed to deposit employee contributions to the benefit plan and used them for personal gain.
According to the indictment from the U.S. District Court for the District of Maryland, Williams was the sole owner and CEO of NW Systems, Inc., a private company based in Largo that provided information technology, administrative support, and facility management services to federal government agencies and commercial clients, from 1996 to 2012.
During that time, the company grew from less than a dozen employees to over 100 employees and it became a multi-million dollar company with $10 million in annual revenue.
A couple of years later, the company established a 401(k) Profit Sharing Plan and Trust Plan that would provide benefits for its employees in the event of retirement, death, illness or termination of employment and was subject to the Employee Retirement Income Security Act (ERISA), a federal United States tax and labor law that establishes minimum standards for pension plans in private industry.
In 2009, the company entered an agreement with the American United Life Insurance (AUL) Company where they would be the administrator of the plan which was funded through voluntary contributions of the employees. NW Systems, Inc. was required to forward these funds from each employees paycheck from his company’s bank account and AUL was required to deposit the money into a trust created by the plan which contained trust accounts for each employee to be invested as directed by that employee.
As sole trustee of the plan from 2011 to 2013, Williams had an obligation to forward the money from the employees to AUL.
Instead, from Jan. 2010 to Nov. 2012, Williams failed to transfer the money into the trust and used the funds for personal interests such as country club memberships, yacht fuel and other purchases, as well as NW Systems, Inc. corporate expenses, without the knowledge of the employees.
In total, Williams failed to deposit $490,000 funds directly withheld from employee paychecks into the benefits plan, a direct violation of ERISA.
“The embezzlement of employee contributions to company retirement plans undermines the private pension system,” said Michael Schloss, ESBA Regional Director. “The U.S. Department of Labor will aggressively pursue those who misuse funds from employee benefit plans.”
The maximum sentence for a crime such as this is are up to five years imprisonment, a maximum of three years of supervised release and a fine of up to $250,000.
Williams was sentenced to one year and one day of prison by the U.S. District Court for the District of Maryland and must pay $354,175 in restitution for violations of ERISA as well as an additional $100 for special assessment followed by three years of supervised release, according to his defense plea.
He was not ordered by the judge to pay an additional fine.
The federal grand jury returned the indictment on January 18, 2017, and the sentence imposed is at the discretion of the Court, said Marcia Murphy, U.S. District Court public affairs specialist.
Also, he must now forfeit to the U.S. all property, real or personal, that came from the proceeds traceable to the violation.
According to the indictment, “The property includes, but is not limited to, a money judgement in the amount of at least $490,000, representing funds directly withheld from employee paychecks in 2011 and 2012 that were not deposited into the employees’ retirement accounts maintained in NW Systems 401(k) Profit Sharing Plan and Trust Plan, and all other interests and proceeds traceable thereto.”
Upon being let out of prison on his supervised release, if Williams’ violates the conditions of his supervised release, his supervised release could be revoked.
Williams’ lawyers did not respond to requests for comment.