Cleveland Job Corps Center / Applied Technology Systems, Inc.
Outcome
Clark V. Hayes, 56, owner of Applied Technology Systems, Inc. and director of the Cleveland and Jacksonville Job Corps Centers under DOL contracts, was sentenced to 37 months in federal prison and ordered to pay $1.5 million in restitution for embezzling more than $100,000 from employees' pension plans and failing to pay over $870,000 in employment taxes.
Details
Cleveland Job Corps Center — Director Embezzlement and Tax Fraud (2010–2016)
Outcome: Clark V. Hayes, 56, of Richfield, Ohio, owner of Applied Technology Systems, Inc. (ATSI) and director of the Cleveland and Jacksonville Job Corps Centers under U.S. Department of Labor contracts, was sentenced to 37 months in federal prison and ordered to pay $1.5 million in restitution for embezzling retirement funds from employees and failing to pay employment taxes.
The U.S. Department of Labor contracted with ATSI to operate the Cleveland and Jacksonville Job Corps Centers. Hayes, as both owner of ATSI and operating director of the Job Corps facilities, exploited his dual role to commit two categories of financial fraud.
First, Hayes embezzled over $100,000 from his employees' pension plans by collecting pension contributions from employee paychecks but diverting those funds rather than depositing them into the pension accounts. Second, he failed to pay over $870,000 in employment taxes for which he received dedicated contract funding from the DOL — meaning he received federal funds specifically earmarked for payroll tax obligations and converted them to other uses.
Hayes pleaded guilty to one count of embezzlement and three counts of failure to pay taxes. He was sentenced in May 2017 to 37 months in prison and ordered to pay $1.5 million in restitution.
How Crucible Prevents This
Crucible's payroll and benefits compliance hook would have flagged the gap between employee pension contributions withheld from paychecks and contributions actually deposited to the pension plan — a discrepancy that should have been detected at the first quarterly remittance. A DOL contract performance audit control requiring annual payroll tax compliance certification, matched against IRS records, would have caught the $870,000+ in unpaid employment taxes far earlier. Crucible's contractor-operator governance hook flags when the owner and operator of a government-funded program are the same individual with no independent oversight.
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