News and Press Releases

Pension Administrator Sentenced to Prison for Embezzling Funds

FOR IMMEDIATE RELEASE
February 7, 2014

PITTSBURGH – An Allegheny County man has been sentenced in federal court to 25 months in prison and $1,190,957.86 in restitution on his conviction of false statements and concealing information on pension plan documents, U.S. Attorney David J. Hickton announced today.

United States District Judge Mark Hornak imposed the sentence yesterday on Merrill J. Druggs, 67, of Gibsonia, Pa.

According to the information presented to the court, Druggs was a Tax Manager for Oerlikon USA Holding, Inc., and a Plan Administrator and Trustee of an Oerlikon employee pension plan covering 1,400 persons. In 2011, after 34 years of employment with Oerlikon, Druggs was fired when the embezzlements were discovered. Druggs embezzled monies in several ways: by diverting Oerlikon monies to bank accounts using addresses of post office boxes that he created and controlled and his personal residence; by setting up an unauthorized 401(k) plan for his benefit and the benefit of two employess who he directly supervised, and used Oerlikon's money to fund it; and by using Oerlikon checks and a company American Express card to pay for his personal expenses. Druggs was able to embezzle $718,518 over a period of several years. The restitution ordered by the court included an additional amount of $472,439.86 to reimburse Orelikon and the pension plan for lost earnings on the embezzled monies.

Before imposing sentence the court said that this was a “carefully calculated plan” and that Druggs used his “education, experience and learning” to steal from Oerlikon and the pension plan. The court noted that Druggs was a trusted fiduciary of Oerlikon and the pension plan, and further explained that in order to function, our “system of commerce relies upon the trust we place in fiduciaries” such as Druggs. By abusing that trust Druggs conduct was “by any measure a very serious offense”.

Assistant United States Attorney Nelson P. Cohen prosecuted this case on behalf of the government.

U.S. Attorney Hickton commended the Federal Bureau of Investigation and the U.S. Department of Labor, Pension Benefit Welfare Administration, for the investigation leading to the successful prosecution of Merrill J. Druggs.

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