Two founders of a Tampa-based real estate investment company have been indicted on federal charges accusing them of pocketing retirement and health-insurance money that had already been deducted from their own employees’ paychecks. Federal prosecutors say the payroll deductions kept coming out of workers’ pay, but the money stopped reaching the 401(k) plan and the health plan it was meant to fund. For any household that relies on payroll withholding to build a retirement account or pay for coverage, the case is a reminder that a line on a pay stub is not the same thing as money that has actually landed in the account it names.
Paycheck Deductions That Never Reached the Retirement Plan
Brandon “Dutch” Mendenhall, 47, of Brandon, Florida, and Amy Marie Smith Vaughn, 48, of New Port Richey, Florida, were named in an indictment unsealed by the U.S. Attorney’s Office for the Middle District of Florida, charging each with 10 counts of theft or embezzlement from an employee benefit plan and five counts of theft or embezzlement in connection with health care. Mendenhall and Vaughn were founders, registered agents or officers of several related companies, including RAD Diversified REIT, RADD Capital, The Seminar Solution and DHI Holdings. Employees of those companies could join a 401(k) retirement plan and a health insurance plan through payroll withholding, having a set amount taken out of every paycheck. According to the indictment, the withheld amounts meant for the 401(k) plan stopped reaching that plan beginning in the spring of 2024, and the withheld amounts meant for the health insurance plan stopped reaching that plan beginning in September 2024.
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The Federal Deadline for Turning Withheld Pay Into Plan Contributions
The allegations sit on top of a specific federal rule that most workers never have reason to learn. Under Department of Labor guidance, the moment an employer withholds a slice of a paycheck for a 401(k) plan, that money legally becomes a plan asset, not company cash. Employers are required to forward it to the plan as soon as it can reasonably be separated from the company’s own funds, and no later than the 15th business day of the following month, a deadline that functions as a ceiling rather than a target, according to the Department of Labor’s ERISA Fiduciary Advisor. A company that can realistically deposit withheld contributions within five business days of payday, for example, is not allowed to wait until the 15th business day of the next month simply because the law technically permits it as a ceiling.
Missing that window is not treated as a bookkeeping slip. The Internal Revenue Service’s own guidance for correcting retirement plan mistakes describes a late deposit of withheld employee contributions as a potential “prohibited transaction” under federal pension law, since the employer is effectively using plan participants’ money for its own purposes. An employer that lets this happen can face an excise tax starting at 15% of the amount involved for every year the failure continues, on top of having to deposit the missed contributions and any lost earnings into the plan. Federal prosecutors in the RAD Diversified case are not describing a late deposit corrected after an audit; they are describing withheld money that, according to the indictment, simply never arrived. The Department of Labor separately maintains a Voluntary Fiduciary Correction Program that lets an employer that discovers a shortfall on its own repay missed contributions plus lost earnings and resolve a prohibited transaction without a criminal referral; the program exists for exactly the kind of gap described in the RAD Diversified indictment, though using it is optional and does not undo a case already brought as a criminal matter.
An Indictment, Not Yet a Verdict
United States Attorney Gregory W. Kehoe announced the unsealing of the indictment, which also notifies Mendenhall and Vaughn that the government intends to seek forfeiture of any proceeds traceable to the alleged offenses. If convicted, the Justice Department says each defendant faces a maximum penalty of 10 years in federal prison. The case was investigated jointly by the Department of Labor’s Employee Benefits Security Administration, the Federal Bureau of Investigation, the Internal Revenue Service’s Criminal Investigation division and the Florida Office of Financial Regulation’s Bureau of Financial Investigations, and it is being prosecuted by Assistant United States Attorney Merrilyn Hoenemeyer. None of that changes the legal status of the case today: an indictment is a formal accusation, not a finding of guilt, and both Mendenhall and Vaughn are presumed innocent unless and until the government proves its case in court.
How Employees Can Tell If Their Own Contributions Are Landing in the Plan
The mechanics behind this case point to a simple check any employee can run on their own retirement account. A 401(k) plan statement should show contribution dates that line up closely with actual paydays, not a vague lump sum weeks or months later. A pay stub showing a retirement deduction that never shows up as a matching deposit on the plan administrator’s statement, over more than one pay period, is the exact pattern regulators treat as a red flag rather than a timing quirk. The standard regulators apply is not generous: contributions must move “as soon as it is reasonably possible to segregate them from the company’s assets,” according to the Department of Labor’s own fiduciary guidance, with the 15-business-day figure serving only as the outer limit a compliant employer should rarely need. The same warning sign applies to the health-plan withholding named in the indictment: a paycheck deduction for coverage should show up as a payment credited to the group health plan on a similar timetable, not months of silence followed by a lapse in coverage employees never chose.
Money That Never Arrives, for a Far More Ordinary Reason
This case turns on money that was withheld from a paycheck and never reached the plan it was labeled for. A quieter version of the same shortfall runs through older households every year, and no wrongdoing is involved: benefit programs are opt-in, so nothing moves unless somebody files the paperwork. State unclaimed property, VA Aid and Attendance for wartime veterans and their surviving spouses, and state drug assistance programs all sit uncollected for that reason alone.
The Benefits Checklist runs 63 pages across 11 of those programs, with the 2026 income limits, a 50-state directory of the offices that take each application, and a printable tracker.
See what the VA Aid and Attendance section asks of a surviving spouse in The Benefits Checklist.
This article was produced with AI assistance and reviewed by a human editor. Figures are linked to their primary sources; where a claim could not be verified from the public record, we say so.
