In a case that emphasizes the severe consequences of financial misconduct, Michelle Leach-Bard, the owner and sole corporate officer of iProcess Online Inc., has been sentenced to one year and one day in federal prison. The Maryland businesswoman’s sentencing follows her conviction for employment tax fraud and the embezzlement of employee 401(k) contributions, resulting in financial losses exceeding $2.8 million.
Michelle Leach-Bard’s Breach of Trust
Michelle Leach-Bard held a position of significant responsibility as the head of iProcess Online Inc., a payroll and accounting firm based in Maryland. Her role required her to manage payroll services, including withholding Social Security, Medicare, and income taxes from her employees’ wages. By law, these withholdings should have been paid to the Internal Revenue Service (IRS) on behalf of her employees.
However, from at least October 2016 through the end of 2021, Michelle Leach-Bard failed to meet these legal obligations. Despite withholding the necessary taxes, she did not forward these funds to the IRS. This deliberate act of fraud resulted in a substantial tax loss to the federal government, amounting to over $2.6 million.
Embezzlement of 401(k) Contributions
The criminal actions of Michelle Leach-Bard extended beyond tax fraud. iProcess Online Inc. also maintained a Section 401(k) Profit Sharing and Retirement Plan designed to help employees save for their future. Employees who participated in this plan had contributions deducted from their wages, which were meant to be deposited into their 401(k) accounts. In addition, the company was responsible for making employer matching contributions for eligible employees.
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Beginning in 2007, Michelle Leach-Bard began misappropriating these funds. Instead of depositing the employees’ contributions into their 401(k) accounts, she retained the money. Moreover, she failed to make the employer matching contributions that some employees were entitled to receive. In total, Michelle Leach-Bard embezzled approximately $207,180.41 from the employee 401(k) plan and withheld an additional $18,740.37 in employer matches.
Consequences for Michelle Leach-Bard
Michelle Leach-Bard’s actions were a clear violation of federal law, and her sentencing reflects the gravity of these offenses. The IRS Criminal Investigation Division and the U.S. Department of Labor’s Employee Benefits Security Administration conducted a thorough investigation, uncovering the full extent of her fraudulent activities.
In addition to her prison sentence, Michelle Leach-Bard has been ordered to pay restitution to both the IRS and her former employees. She is required to repay $2,663,264.12 to the IRS for the unpaid employment taxes and an additional $207,180.41 to her former employees for the embezzled 401(k) contributions. This restitution is a critical step in addressing the financial harm caused by her crimes.
Impact on Employees and the Community
The financial crimes committed by Michelle Leach-Bard had a direct and damaging impact on her employees. They were not only deprived of the security of knowing their taxes were being paid, but they also lost retirement savings that they had rightfully earned. For many employees, the 401(k) plan represents a crucial part of their financial future, and the loss of these funds can have lasting effects.
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Beyond the immediate harm to her employees, Michelle Leach-Bard’s actions have broader implications for public trust in the business community. Companies that manage payroll and employee benefits are expected to operate with integrity and transparency. When these expectations are violated, it undermines confidence in the entire industry and raises concerns about the security of employees’ financial information and assets.
The case of Michelle Leach-Bard serves as a powerful reminder of the consequences of defrauding the IRS and embezzling employee funds. Her sentencing to prison and the restitution order are significant steps toward justice for her victims. As Michelle Leach-Bard begins her prison sentence, her case stands as a warning to others in positions of trust and responsibility to uphold the law and protect the financial well-being of those they serve.
