IL TPA Pleads Guilty to Defrauding Union Pension Funds

June 30, 2006 ( - Michael Linder of Crete, Illinois, pled guilty in federal court in Rockford to charges he defrauded 11 union local pension funds of $5M and embezzled more than $1.9M from five union local pension and health and welfare plans.

According to the announcement from the office of the US Attorney for the Northern District of Illinois, Linder was the president of Joseph/Anthony and Associates, Inc., a third-party administrator for pension plans of various union locals and for health and welfare benefit plans of Machinery Movers Local 136 (River Grove) and Ironworkers Local 498 (Rockford).

Linder admitted to defrauding the union local pension plans by recommending plan trustees change their investments to mutual funds administered by Nationwide Life Insurance Company. However, instead of causing the plans =assets to be invested in mutual funds, Linder caused the assets to be invested with Nationwide in group annuity contracts, the announcement said.

Joseph/Anthony and another corporation Linder operated received $5 million in fees and commissions under contracts with Nationwide. Linder admitted in his plea agreement that he either did not disclose the fees to plan or that he disclosed the fees and commissions to a single trustee but not to the board of trustees. He also admitted that he forged the names of some of the trustees on the contracts with Nationwide to hide the fact that the plans had entered into the contracts.

The plea agreement also says Linder embezzled more than $1.9 million from three pension plans and two health and welfare plans. He admitted he set up bank accounts for each plan to be used to pay premiums on life insurance or stop-loss insurance policies and billed each plan for the premiums. However, the amount billed exceeded the actual amount of premiums and Linder secretly siphoned off the excess amounts.

In December 2004, Linder pled guilty to providing grafts in the form of Harley-Davidson motorcycles valued at about $19,000 to Thomas Kisting, a former business agent of Ironworkers 498 in Rockford and plan administrator for its pension funds, and Fred Schreier, the former president of Machinery Movers Local 136 and a trustee of its benefit plans. In the previous plea agreement, Linder admitted he gave the motorcycles to the union officials because of their decisions and duties relating to the union locals =pension funds. He has not yet been sentenced for those offenses.

Linder’s sentencing is set for November 17, 2006. Each mail fraud charge carries maximum penalties of 20 years in prison and a $10,000,000 fine, and each embezzlement charge carries maximum penalties of 5 years in prison and a $250,000 fine.