Millstone contractor guilty of theft from pension fund

MILLSTONE - A Monmouth County jury convicted township resident Frank Knight, 55, on Nov. 2 of second degree theft for failing to make a required deposit into his employees' pension fund.

Knight, the president and sole shareholder of Knight Contracting Inc. in Millstone, established a pension program for his employees in 1999 and designated himself as the trustee of their pension fund, according to the Monmouth County Prosecutor's Office.

Knight required all of his employees to participate in the pension program and deducted money directly from employees' wages each pay period for deposit into the fund, according to the Monmouth County Prosecutor's Office.

Federal law required Knight to deposit the money into the pension fund within 15 days. However, from July 26, 2002, to Dec. 20, 2003, Knight failed to deposit any money that he withheld from his employees into the fund. During this period, he failed to deposit $606,762 of withheld employees wages, according to the prosecutor's office.

A total of 122 current and former employees enrolled in the pension plan were affected by Knight's failure to deposit the money, according to the prosecutor's office.

"Knight not only violated his employees' trust and the fiduciary obligation that he owed to them, but he committed an egregious theft of the employee retirement benefits," Monmouth County Prosecutor Luis A. Valentin said in a press release.

The U.S. Department of Labor opened an investigation in March 2004 when it received complaints from Knight contracting employees and plan participants. In July 2004, the Special Prosecutions Bureau of the Monmouth County Prosecutor's Office opened a separate investigation after receiving complaints from current and former employees, according to the prosecutor's office.

The case was investigated by Detective Lt. Jason Clark of the Monmouth County Prosecutor's Office, Special Prosecutions Bureau, and Investigator Carol Herzog of the U.S. Department of Labor, according to the prosecutor's office.

The case was assigned to Assistant Prosecutor Thomas Fichter. Attorney Timothy J. Provost, of Freehold, represented Knight, according to the prosecutor's office.

After a cooperative investigation, Knight was indicted on Aug. 8, 2005, by a Monmouth County grand jury for second degree theft by failure to make a required disposition.

Judge Patricia Del Bueno Cleary conducted Knight's trial Oct. 31-Nov. 2. Knight will be sentenced on Feb. 16 and faces up to 10 years in state prison.

At trial, Knight contended that he failed to make the pension fund payments because he was never paid for a change work order performed on a contract for the New Jersey School Construction Corp. in Camden. However, the prosecutor's office produced public records that Knight received over $6.5 million in payments from that corporation between October 2001 and April 2004. This included over $1.8 million on the disputed Camden contract, according to the prosecutor's office.

While Knight has made direct payments to 10 of the plan participants, the U.S. Department of Labor determined that the pension plan is still underfunded by approximately $560,771, the prosecutor's office said.

Bradford P. Campbell, the acting assistant secretary of labor for the Employee Benefits Security Administration, said in the press release that Knight defrauded his workers out of more than half a million dollars in retirement benefits.

"This case sends a clear message that theft of employee benefit plan assets is a serious crime that will be prosecuted to the full extent of the law," Campbell added.

Valentin said that the Monmouth County Prosecutor's Office is committed to combating corporate misconduct and protecting employees from unscrupulous corporate officers. He further noted that his office would seek a term of imprisonment and full restitution at Knight's sentencing.