Loconte gets 20 months in prison for payroll scheme
EX-NER Construction Management Corp. president ordered to pay $4.5M in restitution
BOSTON >> The former president of the Wilmington-based NER Construction Management Corp. was sentenced in federal court on Monday in connection with a payroll scheme involving underreporting overtime hours for union employees and failing to collect and pay payroll taxes.
Frank Loconte, 62, of Beverly Farms, was sentenced by U.S. District Court Judge Denise Casper to serve 20 months in prison, and three years of supervised release, according to the office of Acting U.S. Attorney Joshua Levy. He was also ordered to pay $4.5 million in restitution, and a $15,000 fine.
Levy’s office said, in total, Loconte defrauded union workers of more than $1 million of overtime work and the IRS of more than $3 million by not making the required payroll tax and union dues withholdings and payments.
Documents filed in federal court state Loconte used the funds for personal expenses, including vehicles, household improvements, golf club memberships, and personal property taxes for houses in Beverly, Ipswich and Andover, as well as Naples, Florida.
Court documents state Loconte was the 40% owner of NER and controlled its day-to-day operations during his roughly 13 years with the construction company, from 2009 to 2022.
In addition to serving as president of NER Construction Management Corp., Loconte was the president of the company’s employment management company,
NER Management LLC. He was responsible for collective bargaining with multiple unions, including the Bricklayers and Allied Craftsmen Local Union No. 3 and other local unions affiliated with the Massachusetts and Northern New England Laborers’ District Council of the Laborers International Union of North America.
On behalf of NER, prosecutors said Loconte was bound by collective bargaining agreements
with the unions that governed the transfer of worker-benefit contributions to employee welfare and pension benefit plans, each of
which was subject to provisions in the Employee Retirement Income Security Act. NER was required to make periodic contributions to the benefit funds of employees at set rates and to deduct dues from the pay of each union worker that would also be forwarded to
the benefit funds.
According to prosecutors, from about January 2014 to May 2022, Loconte engaged in a scheme to defraud the benefit funds and the IRS by paying certain union workers for overtime hours without reporting the hours to the union
benefit funds and without making the required payroll tax withholdings and payments.
At times, prosecutors said NER employees were paid entirely in cash for overtime hours worked. Other times, the employees were paid by check without the required withholdings. Court documents state that to facilitate the scheme, Loconte caused certain employees to cash checks at NER’S bank.
Loconte also caused NER
to file false and fraudulent remittance reports with the benefit funds and the unions that underreported the overtime hours worked by these employees, thus depriving the benefit funds and unions of contributions owed to their members. Loconte additionally caused NER to file false and fraudulent IRS payroll taxes that underreported the amount of wages paid.
Instead of paying employment taxes, court documents state Loconte used
NER business accounts to pay for his various personal expenses.
In October 2022, Loconte was indicted by a federal grand jury, and in September 2023, he pleaded guilty to one count of mail fraud and one count of failing to pay taxes.
Loconte’s attorney, George Vien, was not immediately available for comment.
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