Federal court orders fiduciaries to restore $69,521 to company employees

By BenefitsPro

By Paula Aven Gladych

A federal court in Chicago has ordered the owners of an Illinois company to restore nearly $70,000 in health care premiums and retirement plan contributions withheld from the paychecks of employees at several companies that are part of the JJD Industries Group. The judgment resolves a lawsuit filed by the U.S. Labor Department based on the findings of an investigation by the department’s Employee Benefits Security Administration.

The investigation found that John Dombek III and John Dombek Jr. violated the Employee Retirement Income Security Act by improperly managing the company’s benefit plans’ assets.

“Failing to administer health insurance premiums properly demonstrates a total lack of concern for employees and their families,” said Steve Haugen, director of EBSA’s Chicago Regional Office. “Incorporating employees’ voluntary salary contributions into the general assets of a company and failing to forward them to the retirement plan are violations of both the law and the trust workers have placed in their employers.”

Dombek III, who is president of the JJD Industries Group, and Dombek Jr. were co-fiduciaries of the Wisconsin Tool & Stamping Co. 401(k) plan and have been ordered to restore $22,164.45 in unremitted contributions and lost opportunity costs to the plan. Dombek III is also liable for an additional $2,222.78 in unremitted contributions and lost opportunity costs to the J.D. Acquisition 401(k) plan.

Dombek III must also restore $45,134.08 in unremitted contributions and lost opportunity costs to the JJD Industries sponsored group health plan. The company contracted with Blue Cross and Blue Shield of Illinois to provide health and dental benefits to the employees of its related companies, including Wisconsin Tool & Stamping Co., J.D. Acquisition Corp., Akorat Metal Fabricators Inc./Smithco Fabricators Inc. and Pavo Inc./Injection Plastics Corp. The companies paid their premiums separately, and premiums were partially funded through weekly employee payroll deductions.

Dombek Jr. and Dombek III have been barred from serving as fiduciaries or service providers to any employee benefit plan subject to ERISA for a period of five years. An independent fiduciary will oversee the termination of the 401(k) plans of both Wisconsin Tool & Stamping and J.D. Acquisition, as well as the distribution of plan assets to eligible participants.

Dombek Jr. and Dombek III have both previously filed for Chapter 7 bankruptcy protection. The secretary of labor filed separate complaints to determine the dischargeability of these obligations and seek the enforcement of any monetary judgment against both individuals to restore the funds to the employee benefit programs. On Oct. 5 and Oct. 16, 2012, the U.S. Bankruptcy Court for the Northern District of Illinois granted the department’s motions for default judgment, finding that the debts Dombek Jr. and Dombek III owed to the plans were not dischargeable in bankruptcy.

Originally published on BenefitsPro.com