Lockport Union-Sun & Journal — The former owner of Franbilt, Inc. will pay restitution of almost $70,000, spend eight months under home confinement and face two years of probation, following his sentencing Wednesday.
But he won't spend any time in jail.
Thomas J. Barnes, 55, of Buffalo, was sentenced by U.S. District Chief Judge William M. Skretny for embezzling from an employee pension benefit plan. Barnes will repay $69,894.51 in restitution.
Assistant U.S. Attorney Aaron J. Mango, who handled the case, said Barnes, also a lawyer, embezzled money that was supposed to go to the Franbilt 401(k) plan for employees. Franbilt had 45 employees.
On April 15, 2005, Barnes purchased Franbilt, which was an industrial design and fabrication company located on Akron Road in the Town of Lockport. A few months later, on Jan. 27, 2006, Barnes made an amendment to the 401(k) plan and officially became a trustee.
He was responsible for holding in trust and investing 401(k) assets for the sole benefit of Franbilt employees and their beneficiaries. Between February 2006 and until Franbilt closed in January 2007, Barnes embezzled approximately $69,894.51 which has been paid by the defendant, the Department of Justice said.
In 2010, the U.S. Department of Labor obtained a default judgement against Barnes where he was ordered to pay $145,094 in restitution to the plan as part of the judgement. The charges, filed by the Labor Department in March 2009, charged Barnes, along with Franbuilt chief operating and financial officer Michael Burns, with allowing the company to delay forwarding employee contributions to the company-sponsored retirement plan, causing the plan to miss out on opportunities for financial growth.
The Labor Department said the plan suffered “lost opportunity” costs of more than $20,000. The labor suit also alleges that in 2005 and 2006, both men allowed the company to request more than $125,000 from the plan’s custodial trustee and deposited the funds into the company’s corporate account. These assets were never forwarded to the plan’s participants either.
A partial consent judgment had been agreed to in 2009 by the Labor Department and Burns. The judgment prohibits Burns from ever again serving as a fiduciary to any employee benefit plan covered by ERISA.