Michelle Leach-Bard, the owner and sole corporate officer of iProcess Online Inc., a Maryland-based payroll, human resources, and bookkeeping company, recently pleaded guilty to charges of tax evasion and embezzlement. Her actions have had significant repercussions, both for her employees and the government agencies involved.
Background of iProcess Online Inc.
iProcess Online Inc. served as a vital service provider for businesses, handling payroll, human resources, and bookkeeping needs. Michelle Leach-Bard, as the company’s owner and sole corporate officer, held considerable responsibility for managing the financial affairs of iProcess and ensuring compliance with tax regulations and employee benefit plans.
Understanding the 401(k) Plan
A 401(k) plan serves as a retirement savings account with tax benefits, typically provided by an employer. Through this plan, employees can opt to allocate a portion of their salary to be deposited into the account. The funds within the 401(k) can be invested across various avenues such as stocks, bonds, and mutual funds. There exist two primary variants: traditional and Roth. In a traditional 401(k), employee contributions are made before taxes, reducing taxable income, yet withdrawals during retirement are subject to taxation. Conversely, Roth 401(k) contributions come from post-tax income, foregoing immediate tax deductions, but withdrawals, known as qualified distributions, are tax-exempt. Employers commonly offer to match a portion of these contributions.
The Charges on Michelle Leach-Bard
Michelle Leach-Bard’s guilty plea stems from her failure to remit withheld employment taxes to the IRS, resulting in a staggering tax loss exceeding $2.6 million. Over the span of several years, she neglected to pay Social Security, Medicare, and income taxes withheld from employees’ wages, despite being obligated to do so.
Furthermore, Leach-Bard breached her fiduciary duty by withholding employee contributions to the company’s 401(k) retirement plan, totaling approximately $207,180.41, and failing to make employer matching contributions amounting to $18,740.37. This breach not only deprived employees of their rightful retirement savings but also violated federal regulations governing employee benefit plans.
Legal Proceedings
Following her guilty plea, Michelle Leach-Bard is scheduled for sentencing on August 20. She faces a maximum penalty of five years in prison for both the tax evasion and embezzlement charges. Additionally, she may be subject to supervised release, restitution payments, and monetary penalties, as determined by the federal district court judge overseeing the case.
Impact on Employees and the Government
The repercussions of Leach-Bard’s actions extend beyond legal consequences. Her failure to remit employment taxes deprived the government of critical revenue needed to fund essential programs and services. Moreover, the embezzlement from the 401(k)-retirement plan jeopardized the financial security of iProcess employees, who entrusted their savings to the company’s benefit plan.
Investigating Agencies
The investigation into Michelle Leach-Bard’s wrongdoing was conducted jointly by the IRS Criminal Investigation unit and the Department of Labor’s Employee Benefits Security Administration. Their diligent efforts uncovered the extent of her financial misconduct and paved the way for legal action to hold her accountable for her actions.
The case of Michelle Leach-Bard serves as a reminder of the importance of compliance with tax regulations and employee benefits laws. Business owners must uphold their fiduciary responsibilities and ensure the financial well-being of both their employees and the government. As the legal proceedings continue, it is imperative to recognize the significance of this case and its implications for businesses and their stakeholders.
Moving forward, it is essential for businesses to prioritize transparency, accountability, and adherence to regulatory requirements. Employers should regularly review their financial practices, seek professional guidance when necessary, and foster a culture of integrity and trust within their organizations. By doing so, they can safeguard the interests of their employees, protect their company’s reputation, and contribute to a fair and equitable economic landscape.
