MACSA OFFICIALS PLEAD GUILTY TO GRAND THEFT, WILL PAY BACK DIVERTED RETIREMENT FUNDS
Two former officials of the Mexican American Community Services Agency (“MACSA”) pleaded guilty to grand theft today in front of the Hon. Philip Pennypacker. The officials will pay back more than $170,000 in compensation for retirement funds they illegally diverted from the agency’s workers.
As part of a negotiated settlement with the Santa Clara County District Attorney’s Office, Olivia Soza Mendiola, 56, of San Jose, and Benjamin Tan, 62, of South San Francisco, the community agency’s CEO and CFO respectively, must pay the money back within three months. If the payment is made as promised, the court will impose community service rather than jail.
“I am very pleased that MACSA’s employees will soon be receiving all of the money deducted from their paychecks and illegally diverted, plus interest,” John Chase, the prosecutor who heads the D.A.’s Public Integrity Unit, said. “Securing payment of large sums of restitution is often difficult, but it is accomplished with this settlement.”
From 2004 to 2009, the two officials used money that was supposed to be paid to employee retirement accounts to pay other MACSA expenses, including for iPods, Jazzercise classes, walkie talkies and meals at Chuck E. Cheese’s. They did this knowing that the employees’ paycheck stubs falsely represented that this money was being paid to the retirement accounts.
Within 90 days, the defendants are expected to pay more than $170,000 in compensation for employee pay deductions that were never remitted to their pension accounts. This amount includes nearly $60,000 in pre-judgment interest, calculated at a rate of 10 percent per year. The negotiated disposition left open the question whether the defendants will be ordered to pay restitution for a much larger portion of diverted retirement money consisting of employer paid contributions. This involves money that was not deducted from the employees’ paychecks. During the period of time charged in the complaint, MACSA failed to make more than $620,000 in employer contributions to retirement accounts as required by its collective bargaining agreement. The court will decide at a future hearing whether the defendants must pay back this money as additional restitution in this case.
The case was jointly investigated by the Santa Clara County D.A.’s Office and the U.S. Department of Labor.
“We are very pleased to see that retirement funds deducted from these employees’ hard-earned pay will be returned so they can be used as intended,” said Jean Ackerman, regional director of the U.S. Department of Labor’s Employee Benefits Security Administration in San Francisco. “We are committed to taking action to protect workers’ retirement funds and encourage employees to carefully monitor their retirement funds and to contact us with questions or concerns through our toll-free line, 1-866-444-EBSA (3272).”