Construction Company CEO Accused of Misusing Funds
Posted by [email protected] on Oct. 5, 2023 / Subscribe 0
Anyone who owns a construction company understands the stress of managing its schedules and finances and balancing the needs of its employees. However, a recent story from Utah highlights how the pressure can lead to misguided and damaging decisions.
Details of the Case
Recently, Bradley K. Knowlton, co-owner and CEO of Ascent Construction, LLC, was removed as a trustee from the Farmington construction company’s employee stock ownership plan. Judge Ted Stewart of the U.S. District Court for the District of Utah ordered the removal after Knowlton was accused of using $300,000 from the employee retirement account to pay his business expenses.
Knowlton’s removal occurred on July 3, and the Department of Labor (DOL) released a statement on August 1.
Klaus Placke, regional director of the Employee Benefits Security Administration (EBSA), explained, “The removal of Bradley L. Knowlton is a necessary first step to make certain the retirement funds of Ascent Construction’s employees are managed in their best interests. We will continue to work hard to ensure the retirement these employees have worked toward.”
Ascent Construction Inc., founded in 2000, is a commercial construction contractor licensed in Utah, as well as in Arizona, Colorado, Idaho, Montana, Nevada, and Wyoming. The employee benefit plan general investment account held cash contributions that Ascent made for a retirement benefit program established for eligible employees.
According to the complaint, the plan had two accounts for holding assets and at least one checking account so it could distribute funds to employees as needed. The complaint alleges that Knowlton deposited more than $11,000 into an Ascent Construction operating account at Sunwest Bank. “Knowlton subsequently used the plan funds he had deposited into the Ascent Construction, Inc. operating account at Sunwest Bank for various Ascent business expenses, not for the plan participants’ or beneficiaries’ benefit.”
The complaint further alleges that in September 2021, Knowlton transferred $300,000 in plan assets from the general investment account to the Sunwest Bank account. Then, over the next several months, he authorized transactions totaling more than $300,000 from the plan’s account to Ascent’s operating and payroll accounts. He used those funds to pay business expenses and pay himself.
During the DOL investigation, EBSA found that a former employee had requested a $30,000 distribution, and Knowlton failed to pay it out. According to the DOL, that action and misuse of funds are both violations of the Employee Retirement Income Security Act.
The department further discovered in April 2023 that Knowlton had been attempting to withdraw retirement funds, so its solicitor’s office obtained a preliminary injunction against him.
Thoughts on This Issue
The DOL has rightfully stated that employees should be able to count on the protection of their retirement savings so those funds are available when needed. We can only imagine what circumstances led Knowlton to use those accounts for his own purposes. But his alleged actions have jeopardized his employees’ safety nets and may have destroyed the company he worked hard to build.
The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.
Trent Cotney is a partner and Construction Team Leader at the law firm of Adams and Reese LLP and URCA General Counsel. You can reach him at [email protected] and 1.866.303.5868.
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