Weekend DOL Blotter - 7/20/2008

After a short respite last week, the DOL released information on several new cases that were resolved or are in the process of being pursued in courts. First we turn our attention to: "U.S. Labor Department protects 401(k) plan assets of former American Systems Consulting Inc. employees in Dublin, Ohio."

A federal district court in Columbus has granted the U.S. Department of Labor a consent judgment to distribute more than $600,000 in 401(k) assets owed to former workers of American Systems Consulting Inc. of Dublin.

Under the judgment, Larry Lefoldt was appointed as an independent fiduciary to terminate the plan after distributing plan assets to eligible participants and beneficiaries. The judgment resolves the department’s lawsuit against the company, Cliff Gallatin and Loree Gallatin to recover 401(k) plan assets that were improperly used for the benefit of the company. The Gallatins, former plan trustees and officers of the company, have paid $100,860 in delinquent employee contributions and lost opportunity costs owed to the plan.

Our next case comes from Salina, KS: "U.S. Labor Department seeks to restore employee contributions owed to Salina, Kansas 401(k) and health plans."

The U.S. Department of Labor has sued the trustees of the 401(k) and health plans of defunct B&W Electrical Contractors Inc. (formerly of Salina) for failure to forward $22,670.22 in employee contributions to the 401(k) plan and $7,584.82 in health care premiums to the health plan.

The lawsuit alleges that trustees Warren Merrill and Jeffrey Merrill violated the Employee Retirement Income Security Act (ERISA) by failing to forward employee contributions to the plans from May through August 2005. The suit asks the court to require that the Merrills restore all losses to the plans and participants.
Warren Merrill was the president and owner and Jeffrey Merrill was the vice president of B&W Electrical Contractors, an electrical contracting business before ceasing operations in 2005.

Going back to Toledo, OH: "U.S. Labor Department recovers funds owed to Toledo-based Tana Corp. retirement savings plan."

The U.S. Department of Labor has obtained a consent judgment restoring more than $25,000 owed to the retirement savings plan of Tana Corp. in Toledo as resolution of its lawsuit against the company and plan fiduciary Sharon Scherkoske.
The suit alleged the defendants improperly used funds intended for an employee retirement savings plan for the benefit of the company in violation of the Employee Retirement Income Security Act (ERISA).

“The department will not hesitate to act when plan fiduciaries fail to carry out their duty to protect the retirement plan assets held on behalf of participants,” said Joseph Menez, director of the Cincinnati Regional Office of the department’s Employee Benefits Security Administration (EBSA). “Protecting workers’ benefits is a top priority for this administration.”

The department’s suit alleged that plan fiduciary Scherkoske failed to segregate, remit and timely forward employee contributions and loan repayments to the retirement savings plan and used the funds for the company’s benefit beginning in January 2002. As of December 31, 2006, the plan had 18 participants, the latest data available.

A Google search showed that Sharon Scherkoske was prosecuted by the Ohio Attorney General's office in 2005 for failure to pay worker's compensation premiums. Hopefully justice will be served this time.