Weekend DOL Blotter - 9/7/08

The DOL was hard at work last week as they announced three cases:

First, a trip down to San-tone, TX: "U.S. Labor Department sues fiduciary of Adtech Systems in San Antonio to recover 401(k) assets."

San Antonio – The U.S. Department of Labor has sued the owner of defunct Adtech Systems Inc. in San Antonio for improperly using 401(k) assets withheld from employees’ pay to benefit the company in violation of the Employee Retirement Income Security Act.

The department’s lawsuit alleges that from April through November 2005, Eilert Richard Weitzel II, president and owner of Adtech Systems, failed to forward to the company’s 401(k) plan employee contributions deducted from their paychecks. The Labor Department seeks to recover all assets plus interest owed to the plan, correct any prohibited transactions and terminate the plan after all assets are disbursed to eligible participants.
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Chao v. Eilert Richard Weitzel II
Civil Action Number: 5:08-cv-719

Next, we head up to Fishers, Ind. for the next report: "U.S. Labor Department obtains default judgment against Fishers, Indiana business leading to recovery of 401(k) profit-sharing funds."

Fishers, Indiana – The U.S. Department of Labor has obtained a default judgment against defunct Technengineering Services Inc. to appoint an independent fiduciary to manage and terminate the company’s 401(k) profit-sharing plan and distribute $20,599 in assets to eligible participants and beneficiaries.

“Workers and their families counted on these benefit plans to help fund their retirement,” said acting Regional Director Paul Baumann of the Employee Benefits Services Administration’s (EBSA) Cincinnati Regional Office, which investigated this case. “The department will take whatever steps are necessary to recover retirement funds for America’s working people.”

The department’s lawsuit resolved by this judgment alleged that, as plan administrator, the company failed to take responsibility for terminating the 401(k) profit-sharing plan and distributing the assets to participants and beneficiaries after the company ceased operations.
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Chao v. Technengineering
Civil Action Number 1:08-cv-0709

The next report is from Elgin, Ill.: "U.S. Labor Department obtains settlement with Elgin, Illinois business owner to restore 401(k) profit-sharing funds."

Elgin, Illinois – The U.S. Department of Labor has obtained a settlement restoring $14,033 owed to the Airtronics Gage & Machine Co. 401(k) Profit-Sharing Plans as restitution for losses resulting from violations of the Employee Retirement Income Security Act (ERISA). The 401(k) plan was sponsored by the Air Gage Co. and Airtronics Gage & Machine Co. in Elgin.

The companies and Jeffrey Danner, a fiduciary of the plan, agreed to restore the assets. The department sued the defendants for allegedly failing to remit to the plan contributions and loan repayments deducted from employees’ paychecks at various times between 2007 and February 2008. They also allegedly remitted employee contributions late during the period from 2001 through 2006. Those assets were retained in the general assets of the two companies.
“The department will act when plan fiduciaries fail to carry out their duty to protect the retirement plan assets held on behalf of participants,” said Steve Haugen, director of the department’s Chicago Regional Office of the Employee Benefits Security Administration (EBSA).

Employers with similar problems, who are not yet the subject of an investigation by EBSA, may be eligible to participate in the department’s Voluntary Fiduciary Correction Program (VFCP). Participation in the VFCP requires employers to make workers whole but allows them to avoid EBSA enforcement actions and civil penalties as well as any applicable excise taxes. For more information about the VFCP, see www.dol.gov/ebsa.