Santa Ana Firm And Owner Agree To Pay $220,000 Restitution To Pension Plan

Archived News Release — Caution: Information may be out of date.

The U. S. Department of Labor has obtained a settlement with Sherwood Shutter Corp. of Santa Ana, and its owner, Michael L. Thibodeau, to repay over $220,000 plus interest owed to the company’s profit sharing plan.

The profit sharing plan, created in 1986, covers 178 participants and had $320,748 in assets as of April 30, 1995. Thibodeau serves as a plan trustee and the company is administrator of the plan.

Beginning in 1989, Sherwood Shutter began suffering financial troubles which resulted in the company filing for bankruptcy reorganization under Chapter 11 in 1995. During the period of these financial difficulties, Thibodeau attempted but failed to obtain bank financing to keep the company operating.

The Labor Department’s lawsuit, filed simultaneously with the settlement, alleged that in 1991 Thibodeau made four transfers totaling $300,000 from the plan’s account to Sherwood Shutter to operate the business. He made $89,048.67 in repayments that year and subsequently executed a note for the balance. Only two interest payments were made to the plan prior to the company’s 1995 bankruptcy filing.

Thibodeau allegedly failed to timely collect the money owed by Sherwood Shutter to the profit sharing plan, failed to appropriately investigate the merits of making such investments for the plan, and failed to obtain security for the loans and to provide terms of repayment for the loans. Sherwood Shutter was charged with failing to monitor Thibodeau’s actions.

Under the terms of the settlement and consent order, the defendants agreed to repay within two years all money owed to the plan, less any amount owed to Thibodeau’s plan account. Thibodeau also agreed to step down as an official of the plan, to waive his pension benefit until the plan is fully compensated and to be permanently barred from serving as a fiduciary to any plan governed by the Employee Retirement Income Security Act (ERISA). A new administrator will be appointed to manage the plan.

The lawsuit and settlement agreement were simultaneously filed on Feb. 19, 1998 in federal district court in Santa Ana, California. The settlement was entered on Feb. 25. This case resulted from an investigation conducted by the Los Angeles Regional Office of the department’s Pension and Welfare Benefits Administration into alleged violations of ERISA.

(Herman v. Thibodeau)
Civil Action No. SA CV 98-141 GLT (EEx)

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Archived News Release — Caution: Information may be out of date.

Contact Name: GLORIA DELLA
Phone Number: 202.219.8921