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UNITED STATES ATTORNEY’S OFFICE UNITED STATES ATTORNEY CHUCK ROSENBERG |
FOR IMMEDIATE RELEASE:
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August 23, 2007 |
Richmond Man Pleads Guilty to Assisting Others in the Fraudulent Withdraw of Philip Morris Retirement Funds
(Richmond, VA) – Chuck Rosenberg, United States Attorney for the Eastern District of Virginia, announced the plea. Steve R. Day, age 54, of Richmond Virginia pled guilty today to a one count of mail fraud, in violation of 18 U.S.C. § 1341. He faces up to 20 years in prison and a $250,000 fine when sentenced by Senior United States District Judge Richard L. Williams on November 19, 2007.
According to court records, in 2004, Day was involved in assisting other Philip Morris USA Inc. employees to withdraw money from Philip Morris’ Deferred Profit-Sharing Plan for Tobacco Workers (DPSP) through false hardship applications. The DPSP was a defined contribution (profit-sharing) plan that allowed employees to share in the profits of the employer and to withdraw the accumulated funds only after the occurrence of a permissible event specified in the plan, such as a financial hardship. In the event of such a hardship, a Philip Morris employee could make an early withdrawal, provided the amount of any hardship withdrawal did not exceed the amount actually needed (including any federal and applicable state tax withholding) to satisfy the immediate and heavy financial need. Hardship withdrawals were allowed by the Philip Morris DPSP in certain situations, including a withdrawal to make payment of the costs directly related to the purchase of a principal residence for the employee. If an employee made a hardship withdrawal for the purchase of a residence, DPSP rules required the employee to submit supporting documentation detailing the proposed purchase of the primary residence necessitating the hardship withdrawal. This documentation could include the real estate purchase contract, sales contract of present home (if applicable), itemized statement of closing costs (good faith estimate), addendum to the contract or counteroffers associated with the employee’s proposed purchase of his or her primary residence.
In connection with his guilty plea, Day admitted to assisting another Philip Morris employee to submit a false hardship withdrawal request to fraudulently obtain money out of that employee’s DPSP account. Specifically, Day prepared a false and fictitious Offer to Purchase Real Estate contract asserting the Philip Morris employee had a contract to purchase a residence located at 25322 Daush Road, Carson, Virginia, for approximately $110,000. Using the fraudulent documentation generated by Day, the Philip Morris employee submitted a false Hardship Withdrawal Application to Fidelity requesting a hardship withdrawal of $48,860 from the employee’s Philip Morris DPSP account. The employee listed "for the purchase of a primary residence" as the "Hardship Reason" for the withdrawal. Based on the fraudulent documentation, the withdrawal was approved. Upon receipt of the DPSP funds by United States mail from Fidelity, the employee paid Day $1,500 for preparing the fraudulent documentation submitted in support of the Hardship Withdrawal Application. In connection with his plea, Day admitted to participating in 36 fraudulent transactions. In connection with each transaction, Day received $1,500 as payment, for a total of $54,000 that he made in this scheme.
The investigation was conducted by the Federal Bureau of Investigation. Assistant United States Attorney Michael Gill is prosecuting the case for the United States.