News Release
US Department of Labor investigation, litigation result in settlement requiring InterArch Inc. fiduciaries to pay more than $2M
MOORESTOWN, NJ – The fiduciaries of an international design firm in Moorestown must pay more than $2 million to restore mismanaged assets to the company’s retirement plan and in penalties after the U.S. Department of Labor agreed to a settlement following an investigation and litigation.
An investigation by the department’s Employee Benefits Security Administration determined that InterArch Inc. and Shirley and Vernon Hill, fiduciaries of the InterArch Inc. Profit-Sharing Plan, violated their fiduciary duties under the Employee Retirement Income Security Act. EBSA determined that – from at least Aug. 30, 2016, through the plan’s June 30, 2020, termination – the fiduciaries invested the plan’s assets in an undiversified manner in two companies to which the fiduciaries had significant ties. The plan’s position in the stock of one of the companies reached almost 70 percent of the plan’s portfolio before it fell drastically in value, resulting in millions of dollars in losses to the plan.
“The law requires fiduciaries to discharge their duties solely in the interests of plan participants and beneficiaries in a prudent manner, and to diversify plan investments so the risk of large losses is minimized,” said Employee Benefits Security Administration Acting Regional Director Cristina O’Brien, in Philadelphia. “Fiduciaries are also prohibited from using plan assets for their own interests.”
Following EBSA’s investigation, the department’s Office of the Solicitor in New York filed a complaint in the U.S. District Court for the District of New Jersey alleging that InterArch and the two individual fiduciaries engaged in self-dealing and violated their duties of loyalty and prudence and their duty to diversify, which caused the plan to enter into prohibited transactions.
The court entered a consent judgment and order on Sept. 23, 2022, requiring InterArch Inc. and fiduciaries Shirley and Vernon Hill to pay $1,836,853, to plan participants and $183,685, in penalties to resolve the allegations. The judgment also bars the Hills from serving as fiduciaries of any ERISA-covered employee benefit plans in the future.
“The Employee Benefits Security Administration is satisfied that this settlement will result in a substantial recovery to plan participants of the losses that the fiduciaries’ actions caused,” added O’Brien. “Plan fiduciaries must ensure they comply with ERISA’s provisions to protect workers’ retirement income. EBSA is committed to ensuring the integrity of employee benefit programs and holding those who violate the law accountable.”
“This case demonstrates the U.S. Department of Labor’s ongoing commitment to recovering losses caused by plan fiduciaries’ failure to comply with the law,” said Regional Solicitor of Labor Jeffrey S. Rogoff in New York.
EBSA’s Philadelphia Regional Office conducted the investigation. Trial Attorney Amanda Wilmsen of the department’s Office of the Solicitor in New York negotiated the settlement for the department.
InterArch Inc. and the Hills will additionally pay approximately $1.1 million to the retirement plan to resolve a separate but related private class action lawsuit filed by a former employee and those similarly situated in the U.S. District Court for the District of New Jersey on May 27, 2020. A proposed settlement was reached in the private class action lawsuit, which alleged similar ERISA violations as the department’s complaint.
In total, between the department’s settlement and the private class action lawsuit settlement, more than $3 million will be restored to the retirement plan.
InterArch Inc. is an international design firm specializing in architecture, interiors, and branding. The InterArch Inc. Profit Sharing Plan is a defined contribution profit sharing plan that was originally made effective as of Nov. 1, 1976, and was terminated as of June 30, 2020. The plan was funded primarily by employer contributions.
Civil Action No. 22-cv-05289-NLH-MJS
