Two Maryland Men Plead Guilty to Alleged $9 Million Pension Plan Fraud
|U.S. Attorney’s Office October 23, 2012|
ALEXANDRIA, VA—Robert Fulton Rood, IV, 45, of Potomac, Maryland, and Nikolaos M. Hepler, 32, of Gaithersburg, Maryland, pled guilty today to conspiracy to commit wire fraud for engaging in a scheme to steal allegedly over $9 million from Vienna, Virginia-based Southern Management Corporation’s employee pension plan.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia, and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office, made the announcement after the plea was accepted by United States District Judge Claude M. Hilton.
Rood and Hepler were charged on December 13, 2011, by a federal grand jury in a 16-count indictment of conspiracy to commit wire fraud, wire fraud and theft from an employee benefit plan. Rood faces a maximum penalty of 20 years, and Hepler faces a maximum penalty of five years in prison. Hepler will be sentenced on January 25, 2013, and Rood on February 1, 2013.
According to the statement of facts filed with their plea agreements, Rood and Hepler agreed to a scheme to defraud Southern Management Corporation Retirement Trust (SMCRT), a pension plan established by Southern Management Corporation (SMC) for its employees. Rood presented loan application packages to, and subsequently executed purchased agreements with, SMC’s loan committee. SMCRT used funds to invest in these loans to borrowers. The borrowers would use loaned funds to purchase real estate, finance construction, and make monthly interest payments. The loans were generally for one year. At the end of the loan period, the loans were to be repaid with funds ultimately paid to SMCRT.
According to court papers, Rood and Hepler concealed the re-routing of funds due to SMCRT into accounts maintained by Rood. Rood and Hepler also misrepresented that certain loans were active when, in fact, they either failed to settle or were paid off early. When SMCRT raised questions about certain transactions, Rood directed co-conspirators Hepler and Lloyd Mallory, Jr., a certified public accountant, to create a false report regarding loan files intended to mislead SMCRT about the true status of their investment. The government asserts that SMCRT suffered a loss of $9,574,853 as a result of the conspiracy.
This case was investigated by FBI’s Washington Field Office. Assistant United States Attorneys Michael E. Rich and Uzo Asonye are prosecuting the case on behalf of the United States.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae.