Hawbaker FAQs

A: A hearing was held on Tuesday, August 3, 2021, and Defendant Glenn O. Hawbaker, Inc. entered a plea of nolo contendere to four counts of Theft by Failure to Make Required Disposition of Funds Received in violation of the Criminal Code of the Commonwealth of Pennsylvania. On August 11, 2021, the Court of Common Pleas of Centre County, Pennsylvania, Criminal Division (Court) issued four (4) separate Orders, one for each count, sentencing Glenn O Hawbaker, Inc., to five years of probation and establishing the Conditions of Probation. These Orders and Conditions of Probation reflect the terms of a signed plea agreement letter which The Commonwealth of Pennsylvania and Defendant Glenn O. Hawbaker, Inc. (GOH, Defendant or Company) agreed upon, including making restitution and the designation of a Corporate Monitor.

A: In the Order for Count 1, the Court ordered GOH to pay restitution in the amount of $20,696,543.00. This Order also states that the payment of restitution, costs and fees shall be made pursuant to a contract defining a payment schedule established by the Centre County Probation and Parole Department (CCPPD).

A: The Corporate Monitor (CM) has two main tasks. First and foremost, the CM will oversee payment of restitution for Defendant’s conduct for the years 2015 through 2018. Secondly, the CM has responsibility to oversee GOH’s compliance with state and federal prevailing wage laws, including the Pennsylvania Prevailing Wage Act (PWA), the federal Davis-Bacon Act (DBA), as well as Davis-Bacon Related Acts (DBRA).

The CM will serve for the five-year term of probation under which the Court placed GOH.

As noted in the Conditions of Probation incorporated in each Court Order, the CM will perform its restitution and oversight by the following activities:

• Submit a written monitoring plan to the Court within 60 days of the date of sentencing;

• Submit at least quarterly compliance reports to the Court during the first year of probation and upon a frequency to be determined by the CM for the subsequent years of probation;

• Supply the CCPPD and the Office of the Attorney General for the Commonwealth of Pennsylvania with a copy of any compliance report submitted to the Court;

• Monitor Defendant’s prevailing wage practices to ensure the Company is in compliance with the Pennsylvania PWA and federal DBA;

• Oversee the correction and remedying of any non-compliant prevailing wage practices by GOH, including consulting government administrative and enforcement agencies.

The Corporate Monitor is Alfred B. Robinson Jr., who is with the firm Ogletree Deakins (Ogletree).  While Ogletree does have offices in Philadelphia and Pittsburgh, Mr. Robinson is located in its Greenville, S.C. office.  He has extensive prevailing wage background and is a former acting Administrator at the U.S. Department of Labor Wage and Hour Division which enforces DBA.    

A: The CM is committed to a transparent process so interested parties may contact him.  However, given the large number of such affected individuals, it will be a challenge for the CM to respond to all individual contacts.  The CM plans to work with the Office of the Attorney General (OAG) and its Office of Victim Advocate (OVA) as a means to communicate with individuals and victims.  He also plans to utilize other types of social media in order to communicate with victims and other interested parties.  Individuals are encouraged to monitor the website of the Office of Attorney General (https://www.attorneygeneral.gov) for updates and additional FAQs.

A: As set forth in the Court Order for Count 1, the Court sentenced the Company to pay restitution in the amount of $20,696,453.00 to victims during the 2015 through 2018 time period. The Court Order requires CCPD enter into a contract which will establish a payments schedule and states that the Court will approve the contract. As provided in the Conditions of Probation, the CM will oversee the payment of restitution.

A: It is anticipated that restitution will be paid according to a schedule that CCPPD will establish and the Court approves.

A: As part of the criminal investigation process, an outside accounting firm and other consultant were engaged to compile a list of victims and the amount of restitution due each individual for the period from 2015 through 2018. Procedures will be implemented for victims and other interested individuals to ascertain if they are on the list of victims and to update their contact information, including mailing address.

A: As noted in FAQ number 3 above, individuals are encouraged to monitor the website of the OAG for news, information and updates.

A: The Office of the Attorney General recommends that interested individuals contact the Pennsylvania Department of Labor and Industry  www.dli.pa.gov or the US Department of Labor Wage and Hour Division www.dol.gov/agencies/whd.  The CM only has authority in this criminal matter involving GOH. 

The Corporate Monitor has a dedicated email address and toll-free number that a victim can use to contact them. The email addresses are: hawbakerlitigation@ogletree.com or hawbakerlitigation@ogletreedeakins.com. The toll-free number is 833.960.8383; it has a recorded message but a victim can leave a message and the Corporate Monitor will return the call. Victims may use either means of communication to contact the Corporate Monitor.

A: The Corporate Monitor is working to address several logistical and legal questions in order to be ready to oversee the distribution of restitution in accordance with the computations prepared by an independent, outside accounting firm for the Commonwealth of Pennsylvania Office of Attorney General. At this juncture, the rules for the distribution of the restitution may differ for current as opposed to former employees. For example, it is not legal to make a payment to a 401(k) plan of a former employee of Glenn O. Hawbaker, Inc. Thus, former employees may receive their restitution in the form of a check, less withholdings for federal, state and other taxes. These questions, among others, need to be resolved in order to be able to distribute the restitution.

Also, the orders in this case were filed with the Prothonotary and Clerk of Courts for Centre County on August 11, 2021. This is the date that the Corporate Monitor is applying for the distribution of the restitution per the plea agreement letter submitted and entered into by the Commonwealth of Pennsylvania Office of Attorney General and Glenn O. Hawbaker, Inc. Unless circumstances change due to legal or logistical complications, the goal is to distribute the restitution in early December, 2021.

It is anticipated that restitution distributions will be mailed to victims and/or transferred into victims’ retirement accounts, where appropriate, beginning on or about December 1, 2021.   

A: In addition to working out some questions and logistics as noted in number 1 above, the Corporate Monitor plans to verify a victim’s identity and correct mailing address prior to the distribution of the restitution to ensure that the restitution is paid to the correct individual. The Corporate Monitor is in the process of doing that now and will communicate with victims over the next several weeks to make the necessary verifications.

A: The OAG and GOH executed a plea agreement letter (PAL) which was filed with the Court of Common Pleas of Centre County, Criminal Division. At the August 3, hearing, the Judge adopted the PAL as part of the Company’s plea. The PAL states that restitution would be paid to the victims under the CM’s supervision. It further requires that restitution be paid so as to limit the tax implications for victims and to pay restitution as cash or contributions to retirement accounts or as directed by the CM. Restitution payments to retirement accounts are pre-tax dollar payments not subject to tax withholdings and will limit the tax implications for a victim per the PAL. However, cash payments are subject to reduction for federal, state and local taxes. Based upon the PAL, the CM is obligated to apply the terms of the PAL as much as feasible, including limiting the tax implications for victims when possible.

A: The OAG retained an independent accounting firm that reviewed GOH’s payroll records for the fourth quarter of 2015 and for the years 2016 through 2018.  The accounting firm compiled the list of victims who worked on prevailing wage jobs during this time period, computed the amount of fringe benefits for each victim, and then compared the amount of fringe benefits due to each victim with the amount actually provided.  The restitution amount is the difference between what was due to each victim and what was actually paid.  The Court also adopted this list of victims and restitution amounts computed for each victim as part of the PAL.  Restitution payments will be made in accordance with this list, amounts computed, and terms of the PAL.  Depending upon the category in which a victim falls, restitution will be paid as described in the following FAQs.

A: Former employees of GOH who did not work for GOH during 2021 will receive their restitution in cash via a check.  There is no option available for former employees to limit the tax implications for this group of victims, as the PAL requires.  The amount of restitution computed by the outside accounting firm will be paid to each victim in this group less usual federal and state taxes.  In addition to the federal and state withholdings, municipalities also may require tax withholdings.  Among the withholdings, a federal tax withholding rate of 20% and a Commonwealth of Pennsylvania tax withholding rate of 3.07% will apply to the restitution payments.  For victims in this group who receive a significant restitution payment, they may contact the CM to ask about strategies, if any, to minimize the tax consequences of their payment; the CM again may be contacted as follows:

by email hawbakerlitigation@ogletreedeakins.com or by calling a toll-free number 833.960.8383 and leaving a message which the CM will return.

A: The mandate of the PAL to limit the tax implications for victims can be effectuated for victims of this group. Consequently, the restitution for each victim in this group will first be applied as a contribution to a victim’s 401(k) account, subject to the maximum contribution limitation of the Internal Revenue Code. If the amount of a victim’s restitution exceeds the 401(k) contribution limit, then such victim will receive the balance of their restitution in cash via a check. The amount of this cash restitution payment also will be reduced by the usual federal and state taxes. In addition to the federal and state withholdings, municipalities also may require tax withholdings. Again, a federal tax withholding rate of 20% and a Commonwealth of Pennsylvania tax rate of 3.07% will apply to the balance of such restitution payments.

A: Yes. As noted above, restitution payments represent the underpayment of fringe benefits for each victim on prevailing wage jobs. These payments essentially represent the difference in fringe benefits between the actual costs of such benefits to GOH and the credit claimed by GOH to satisfy its prevailing wage requirements. Thus, had these payments actually gone into a victim’s retirement account, then taxes would have been paid when funds from the retirement account were withdrawn. Alternatively, had these payments been paid as cash in lieu of fringe benefits which is permitted by the law, then taxes also would have been withheld. Hence, these payments are like wages subject to tax withholdings and do not qualify as restitution payments in a criminal matter which are not subject to tax withholdings.