Yesterday, September 6th, the news broke that Frank Loconte, a 62-year-old Beverly Farms resident, admitted guilt to a payroll scheme involving underreporting of overtime hours for his union employees and failing to collect and pay payroll taxes. In a tale of deception and betrayal, union workers and the IRS were defrauded of millions of dollars over an extended period of time, according to the District of Massachusetts' press release.
Loconte's company, NER Construction Management Corporation, employed union workers from several unions, including Bricklayers and Allied Craftsmen Local Union No. 3 and various local unions affiliated with the Massachusetts and Northern New England Laborers' District Council of the Laborers International Union of North America. Bound by collective bargaining agreements, his company was required to make periodic contributions to employee welfare and pension benefit plans, which were subject to ERISA provisions. Furthermore, Loconte was responsible for deducting union dues from the pay of each union worker and forwarding these funds to the respective benefit funds, as stated in the press release.
The scheme unraveled as investigators discovered that from January 2014 to May 2022, Loconte paid certain union workers for overtime hours without reporting these hours to the union benefit funds and without making the necessary payroll tax withholdings and payments. At various times, some NER employees were paid entirely in cash for overtime hours worked, while others received checks without required withholdings. Loconte's actions not only deprived the union workers of their hard-earned income, but also interfered with the system put in place to protect their rights and benefits, as per the District Attorney's Office.
Adding to the severity of the scheme, Loconte filed false and fraudulent remittance reports with the benefit funds and the unions which underreported the overtime hours worked by the employees. In doing so, he deprived the benefit funds and unions of contributions owed to their members. Additionally, Loconte filed false and fraudulent IRS payroll taxes that underreported the amount of wages paid, leading to even greater harm.
But the selfishness didn't stop there. Rather than using NER's business accounts to pay employment taxes, Loconte used the funds to cover personal expenses, including vehicles, personal property taxes, household improvements, and golf memberships. Failing to report these benefits to the IRS resulted in the defrauding of over $1 million from union workers for their overtime work and over $3 million from the IRS for uncollected payroll taxes and union dues withholdings and payments.
Loconte pleaded guilty yesterday, September 6th, to one count of mail fraud and one count of failing to pay taxes. U.S. District Court Judge Denise J. Casper scheduled the sentencing for November 29th, 2023, marking a key moment of accountability for the crimes committed.
The charges hold significant consequences: mail fraud carries a sentence of up to 20 years in prison, three years of supervised release, and a fine of up to $250,000, while the charge of willful failure to collect and pay over taxes result in a maximum sentence of five years of imprisonment, two years of supervised release, and a fine of up to $250,000. Sentences will be determined based on the U.S. Sentencing Guidelines and statutes which govern criminal case decisions.
