:: Government Reverses Position On ERISA Theft Indictments

The government, having now decided that it erred in pursuing the ERISA theft offenses and that we erred in affirming those convictions, confessed error in the Supreme Court. See Young v. United States, 315 U.S. 257, 258, 62 S. Ct. 510, 86 L. Ed. 832 (1942) (recognizing that “[t]he public trust reposed in the law enforcement officers of the Government requires that they be quick to confess error when, in their opinion, a miscarriage of justice may result from their remaining silent”).

United States v. Jackson, 2009 U.S. App. LEXIS 14297 (4th Cir. July 1, 2009)

The issue presented in U.S. v. Jackson is of critical importance in the enforcement of ERISA criminal provisions.  I noted this case when it was decided by the Fourth Circuit in May of 2008.  At issue – are unpaid ERISA plan contributions plan assets?

The District court had held that the defendants were properly convicted under 18 U.S.C. § 664 and § 669 because the funds withheld from employee wages were plan assets.  The Fourth Circuit agreed.

The defendants sought Supreme Court review.  In an interesting turn of events, the Solicitor General reversed the government’s position on the theft indictments.  The Supreme Court vacated the decision of the Fourth Circuit and remanded for further consideration in light of the Solicitor General’s new position.

On remand, the Fourth Circuit stated:

The government, having now decided that it erred in pursuing the ERISA theft offenses and that we erred in affirming those convictions, confessed error in the Supreme Court. See Young v. United States, 315 U.S. 257, 258, 62 S. Ct. 510, 86 L. Ed. 832 (1942) (recognizing that HN1″[t]he public trust reposed in the law enforcement officers of the Government requires that they be quick to confess error when, in their opinion, a miscarriage of justice may result from their remaining silent”). Nevertheless, the government’s “confession does not relieve [us] of the performance of the judicial function.” Id. Although “[t]he considered judgment of the [government] that reversible error has been committed is entitled to great weight, . . . our judicial  [*6] obligations compel us to examine independently the errors confessed.” Id. at 258-59.

The implications went further:

The government’s confession of error implicates the propriety not only of the defendants’ convictions on the ERISA theft offenses, but also of their sentences. Because the district court determined, as did we, that — contrary to the position now being espoused by the government — unpaid employer contributions constitute ERISA plan assets, we deem it prudent to remand so that the district court may consider in the first instance the government’s confession of error.   Accordingly, we vacate the defendants’ convictions on the ERISA theft offenses, as well as their sentences, and remand for such other and further proceedings as may be appropriate. Cf. United States v. Matthews (In re Matthews), 395 F.3d 477, 483 (4th Cir. 2005) (remanding for district court to consider in first instance new theory raised by government on appeal).

The issue presented in this case arises frequently where employers encounter financial difficulties.   The Solicitor General’s position on unpaid contributions provides some comfort to plan fiduciaries in this context