United States v. Eriksen

Defendants, the chairman and chief executive officer of Lunde Electric Company ("company"), appealed convictions stemming from the misappropriation of employee 401(k) contributions to pay the company's operating expenses. At issue was whether there was sufficient evidence to support defendants' convictions under 18 U.S.C. 664, for embezzlement or conversion of elective deferrals, and 18 U.S.C. 1027, for false or misleading statements in a required Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C 1001 et seq., document. The court held that there was sufficient evidence to support defendants' convictions on Counts 17 and 18 under section 664 where there was sufficient evidence for the jury to conclude that the 1991 Profit Sharing Plan had been restated before defendants retained their employees' elective deferrals in the company's general account; where defendants commingled their employees' contributions with the company's assets to prop up their failing business and therefore, intentionally used their employees' assets for an unauthorized purpose; where they sent participants account statements showing 401(k) balances which were in fact non-existent; where defendants' decision to deviate was the wilful criminal misappropriation punished by section 664; and where defendants were alerted repeatedly about their obligation to remit the deferrals and defendants hid their actions from employees. The court also held that there was sufficient evidence to support defendants' convictions on Count 21 under section 1027 where defendants' initial decision to mislead their own employees about the solvency of their retirement plans by filing false account statements and false Form 5500s were the behaviors targeted by section 1027.