Shaker Heights Man Charged with Converting Pension Plan Property

Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, announced today that Edward Scott Emerson, age 56, of Shaker Heights, Ohio, was charged in a one-count information with converting pension plan property consisting of two adjoining parcels of land.

The property belonged to the Mueller Electric Company Employees’ Pension Plan (“the Plan”), which was subject to the provisions of Title 1 of the Employee Retirement Income Security Act of 1974 (ERISA). According to the information, during 2006 through 2009, Emerson, who is also known as E. Scott Emerson and Scott Emerson, was president and part-owner of Mueller Electric, a corporation with a principal facility in Akron, Ohio, and an office in Cleveland, Ohio. Mueller Electric was the Plan’s sponsor and Emerson was the Plan’s sole Trustee.

As set forth in the information, the background for the charge involves Emerson’s action in 2006 of having the Plan purchase the subject property, located in Perkins Township, Erie County, Ohio, for use as a parking lot by an adjacent water park/hotel resort known as the Maui Sands Water Park (“Maui Sands”). The parcels (“the parking lot property”) were needed to provide sufficient parking to satisfy local zoning laws governing Maui Sands. At the time of the purchase, Emerson was the principal owner and president of two limited liability companies which jointly formed a venture to develop, construct, and operate Maui Sands. The partially completed Maui Sands resort opened in May 2008 and closed in November 2008, after which the resort’s principal lender obtained appointment of a receiver to take control of Maui Sands.

The information charges Emerson with converting Plan property during July through September 2009 by selling the parking lot property to a relative at favorable payment terms and subject to an oral agreement giving Emerson joint control over the subsequent disposition of the property. The sale to his relative took place after Mueller Electric defaulted on its own loans and Emerson became concerned that a Receiver might be appointed for the company, who might then replace him as Plan Trustee and thereby gain control over the parking lot property. Emerson’s oral agreement with his relative provided that they would work jointly to seek a subsequent sale of the property for use by the Maui Sands resort at a price that would allow a profit to Relative and provide money the defendant could repay to the Plan.

If convicted, the defendant’s sentence will be determined by the court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violation. In all cases the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.

The government’s case is being prosecuted by Assistant United States Attorney John M. Siegel, following an investigation by the U.S. Department of Labor (DOL), Employee Benefits Security Administration, Ft. Wright, Kentucky; the DOL Office of Inspector General, Office of Investigations, Cleveland, Ohio; the Pension Benefit Guaranty Corporation, Office of Inspector General, Washington, D.C.; and the Cleveland office of Federal Bureau of Investigation.

An information is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.