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LAPSED IOWAN GETS 78 MONTHS FOR LOOTING EMPLOYEE PLAN

May 26, 2006

Ken Lay hand Jeffrey Skilling aren't the only former executives who have made news the hard way recently. Former Iowan Andrew Mark Armstrong also has achieved unwanted attention. The Des Moines Register reports:

A "grade-A con man" who led an Elkhart company into bankruptcy, even while he spent its money on houses and cars, will spend 6 years in federal prison for his embezzlement and failure to pay withholding taxes, a federal judge ruled Thursday.

Andrew Mark Armstrong, 52, also will have to pay a $50,000 fine and at least $29,473 in restitution to make up for money he stole from health insurance and 401(k) accounts for employees of the now-defunct All-Tech Inc.

Federal prosecutors say Armstrong pocketed thousands of dollars from the Elkhart hydraulic company in 1999 and 2000 and deliberately didn't pay taxes that were withheld from employee paychecks. The money disappeared while Armstrong bought houses, liberally distributed All-Tech's petty cash, and leased more than 40 Cadillacs for himself and others.

The jury decided that he not only did he loot the 401(k) plan, he also failed to pay over federal withholding and employment taxes. If you ever want to see the inside of a courtroom, or a federal penitentiary, that's a good way to get there. Mr. Armstrong says he's seen enough:

"I have no desire to be in any court of law, anywhere, ever again for any reason."

Well, he has that covered for the next 78 months, anyway.

Mr. Armstrong was also fined $50,000 and required to make restitution. He also is probably liable for all employment taxes. Unfortunately for the employees of the looted 401(k) plan, he may come up short. Court documents indicate that he had trouble paying his lawyers even before he was convicted, and odds are that he won't have much earning power over the next few years.

Links:

Jury instructions

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