DOL seeks, wins relief for plan participantsNews added by Benefits Pro on January 21, 2016

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By Marlene Y. Satter

The Department of Labor has been busy in January, winning a judgment to restore $1.3 million to plan participants at one now-defunct company and filing suit in four other cases on behalf of workers.

The judgment came after the agency filed suit last July on behalf of participants in the Ants Software Inc. 401(k) plan, after the Dunwoody, Georgia company ceased operations in February of 2013 and the fiduciary, Rik Sanchez, engaged in some distinctly unfiduciary-like behavior.

According to the agency, after the company ceased operations, Sanchez informed the plan’s third-party administrator, Aspire Financial Services Inc., that the plan was being terminated and requested that Aspire distribute plan assets to the plan participants.

But an investigation revealed that in May 2013, Sanchez used his plan administrative login information to access each plan participants’ profile information.

He then not only changed each participant’s mailing address to be that of Ants, he also changed the plan’s new bank account to one that he controlled.

Aspire refused to distribute plan assets because of the changes, so then Sanchez requested Aspire to transfer plan management and the assets of the plan to a company named Renowned Holdings Inc., an entity controlled by Sanchez. Once again, Aspire refused to proceed with distributing plan assets.

So Sanchez stopped administering the plan, leaving plan participants high and dry and unable to get either information about plan funds or access to benefits.

At that time, the plan had approximately 76 participants and assets totaling approximately $1,383,875.

The judgment against Rik Sanchez, Ants Software Inc., and Ants Software Inc. 401(k) Plan, not only permanently bars them from serving as a fiduciary but also appoints, at the defendants’ expense, Receivership Management Inc. of Brentwood, Tennessee as the independent fiduciary of the plan for the purpose of terminating the plan and distributing its assets to plan participants.

The defendants have also been ordered to pay the expenses of the independent fiduciary.

Carr Freight Systems Inc.

uits filed include one to permanently remove the fiduciary and terminate the defunct Carr Freight Systems Inc. 401(k) plan in Eagan, Minnesota.

The suit, filed against Carr Freight Systems Inc. and the Carr Freight Systems Inc. 401(k) Plan, alleges that from January 1, 2001, through the present, Carr Freight Systems Inc. was the sponsor and administrator of the Carr Freight Systems Inc. 401(k) Plan.

The company ceased operating in 2002, and failed to terminate the plan in violation of the Employee Retirement Income Security Act. As of March 31, 2013, the plan had two participants and $1,723.38 in assets.

The suit also seeks the appointment of an independent fiduciary to terminate the plan and distribute its assets. AMI Associates Group Inc.

DOL also filed suit to require Earl Kaminski, the fiduciary of the AMI Associates Group Inc. 401(k) Plan, to restore employee contributions to the plan.

According to the agency, from Ocober. 1, 2008, to the present, Kaminski was president and sole owner of AMI Associates Group Inc., and exercised authority and control over the management or disposition of the assets of the company’s 401(k) plan.

It alleged that from January 1, 2010, to December 31, 2013, Kaminski failed to remit a total of $7,374 in salary deferrals to the plan.

On November 14, 2013, a public auction was held to sell AMI’s assets, and on March 14, 2014, AMI was involuntarily dissolved by the State of Illinois.

DOL seeks an order requiring Kaminski to make good to the plan all losses, including lost opportunity costs; it also wants him removed as fiduciary and the appointment of an independent fiduciary to terminate the plan and distribute its assets to participants and beneficiaries.

In addition, DOL seeks to have Kaminski pay the independent fiduciary costs and fees associated with distributing the plan’s assets.

Claxton Consulting Engineers Inc.

DOL has also filed suit against James M. Claxton, Jr., the sole officer and owner of Claxton Consulting Engineers Inc., a Missouri corporation providing engineering consulting services.

CCE operated within Missouri until ceasing operations in August 2009. It was the sponsor and plan administrator of two employee benefit plans: a 401(k) plan and a group health plan.

At varying times from October 2006 through September 2008, Claxton withheld and failed to forward $13,119.19 in employee elective deferrals to the 401(k) plan, and also, at varying times in 2007 through August 2009, he withheld and failed to forward $1,363.38 in payroll withholdings of insurance premiums intended for payment of health care premiums.

Claxton and his wife filed for Chapter 13 bankruptcy, and he signed a stipulation of non-dischargeability in which he admitted that he was a fiduciary to the 401(k) plan and to the health plan and the debt was non-dischargeable.

DOL seeks an order requiring Claxton to restore $10,720.33 to the 401(k) plan plus $2,816.58 in lost earnings, and $1,363.38 to the health plan plus $96.09 in lost earnings.

TSPA Holding Inc.

Last but not least, DOL filed suit against TSPA Holding Inc., Derlis “Trey” Salinas, and TSPA Holding Inc. 401(k) Profit Sharing Plan, seeking to recover $31,000 in missing retirement funds affecting three employees.

According to the agency, beginning July 2011, TSPA Holding Inc. and Derlis Salinas began withholding employee contributions but failed to remit those contributions and mandatory employer matching contributions to the 401(k) plan accounts of the company’s employees.

DOL seeks a court order requiring the restoration of all plan losses and barring Derlis Salinas from serving as a fiduciary to any other employee benefit plan.

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