Federal prosecutors indicted the two founders of a Tampa Bay-area real estate investment trust on Sept. 10, accusing them of pocketing 401(k) and health-insurance premium withholdings that were deducted from employees’ paychecks but never forwarded to the plans. Brandon “Dutch” Mendenhall of Brandon, Florida, and Amy Marie Smith Vaughn of New Port Richey each face 10 counts of theft or embezzlement from an employee benefit plan and five counts of theft or embezzlement connected to health care, according to the U.S. Attorney’s Office for the Middle District of Florida. Both are charged, not convicted, and are presumed innocent unless the government proves its case.
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What federal prosecutors allege
The indictment, announced jointly by IRS Criminal Investigation and the Justice Department’s Middle District of Florida office, names Mendenhall and Vaughn as founders, registered agents or officers of RAD Diversified REIT and three affiliated entities: RADD Capital, The Seminar Solution and DHI Holdings. U.S. Attorney Gregory W. Kehoe’s office is prosecuting the case, with Assistant U.S. Attorney Merrilyn Hoenemeyer handling it, and the case was developed jointly by IRS-CI, the Labor Department’s Employee Benefits Security Administration, the FBI and Florida’s Office of Financial Regulation. Each of the 15 counts carries a maximum of 10 years in federal prison, and prosecutors are separately seeking to forfeit any proceeds traceable to the alleged scheme. RAD Diversified REIT is a Tampa Bay-area non-traded real estate investment trust, a structure that, unlike a publicly traded REIT, does not report a daily share price and instead relies on the company’s own valuations, which is part of why the benefit-plan withholdings at the center of this indictment involve the trust’s own payroll rather than money raised from outside investors.
Where the paycheck deductions were supposed to go
Prosecutors allege the scheme began in spring 2024, when 401(k) withholdings deducted from employee paychecks stopped being deposited into the retirement plan, and widened that September when health-insurance premiums taken out of the same paychecks also stopped reaching the plan. Under federal pension law, money an employer withholds from a worker’s pay for a retirement plan becomes a plan asset the moment it is deducted, not company cash to hold onto, which is why the Internal Revenue Service’s own guidance for correcting late deposits treats a long delay in forwarding those funds as a compliance failure with its own set of penalties well before any criminal charge is ever filed.
A pattern of alleged financial misconduct around the same company
This is not the only case federal authorities have brought naming Mendenhall this year. IRS-CI separately indicted him on a count of submitting false information to finance the purchase of a $1.6 million house, according to a distinct release from the agency. The Securities and Exchange Commission has also sued RAD Diversified REIT, Mendenhall, Vaughn and an affiliated entity, The Seminar Solution, in a civil securities-fraud case, according to the SEC’s litigation release, a separate proceeding from the employee-benefit-plan indictment and one that, like the criminal counts, remains an allegation the defendants can contest.
Why a missed deposit is different from a late paycheck
A paycheck that arrives a few days late is an inconvenience an employee can usually see and complain about immediately. A 401(k) contribution that is deducted but never deposited is harder to notice, because the money still disappears from a pay stub on schedule even though it never reaches the retirement account where it is supposed to start earning returns. For a worker within a few years of retirement, months of missing contributions mean months of lost market growth on top of the principal itself, a gap that compounds the closer someone is to needing the money. A lapsed health-insurance premium carries its own version of the same risk: an employee can believe coverage is active because the premium came out of their pay, only to discover a claim was denied because the plan never received it.
The maximum penalties, and what happens next
If convicted on every count, Mendenhall and Vaughn would each face a statutory maximum of 10 years in prison per count, though federal sentencing guidelines typically produce a lower effective term even when multiple counts run consecutively. Neither the IRS-CI release nor the Justice Department’s parallel announcement sets a trial date or names bond conditions, and the office has not said whether either defendant has entered a plea. The government’s forfeiture claim would attach to whatever the case eventually recovers, not to any amount already returned to affected workers.
What employees can do if a deduction never shows up
The Labor Department’s Employee Contributions Initiative exists for exactly the pattern prosecutors describe here: employers who deduct retirement contributions from a paycheck and never forward them to the plan. Workers who suspect the same gap on their own pay stubs can compare a given pay period’s withholding against the deposit date on their plan statement, since a delay of more than a few weeks between the two is itself the signal the Labor Department’s enforcement program is built to catch, well before any case reaches an indictment. The same comparison works for a health-insurance premium: a worker can call the plan administrator listed on an insurance card to confirm a given pay period’s premium was actually received, rather than assuming a payroll deduction and an active policy are the same thing.
When a paycheck deduction never reaches the plan
Prosecutors say the RAD Diversified REIT founders let 401(k) and health-plan withholdings sit uncredited for more than a year before anyone outside the company caught it, a gap that can go unnoticed on an ordinary pay stub for months.
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This article was produced with AI assistance and checked against the primary sources linked above.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
