Syracuse, New York, Firm And Pension Trustee To Make $541,000 In Restitution To Pension Plan

Archived News Release — Caution: Information may be out of date.

The U. S. Department of Labor has obtained a consent judgment requiring Hull Corp. and a trustee of its employee stock ownership plan (ESOP) to pay $541,667 in restitution to the plan and to pay civil monetary penalties to the federal government for violating federal pension law.

Money restored to the plan will be allocated to the accounts of all plan participants except defendant John E. Hull, who was a plan trustee and director of the company. Besides the restitution, the defendants were ordered to pay an additional penalty of 20 percent of the amount of any improper transactions with the plan. The judgment also permanently bars Hull Corp. and Hull from serving as fiduciaries to any plan governed by the Employee Retirement Income Security Act (ERISA).

The ESOP was established Jan. 1, 1991 and contains three components: a fixed contribution portion, variable contribution component and 401(k) plan. Both the fixed and variable components are designed to invest primarily in the stock of the Hull Corp.

In a lawsuit filed simultaneously with the judgment, the Labor Department alleged that the corporation and its board of directors voted to transfer assets of a corporate retirement plan to the ESOP. The board of directors then approved an agreement under which the ESOP purchased 40,000 shares of Hull Corp. capital stock for more than $2 million.

According to the lawsuit, the defendants violated ERISA by executing the transactions to benefit the Hull Corp. and its shareholders and by failing to conduct an independent, good faith analysis and not retaining an independent trustee to advise them about the prudence of converting the retirement plan into the ESOP. Furthermore, the lawsuit alleges that the ESOP paid more than fair market value to purchase the corporate stock.

 This case resulted from an investigation by the Boston Regional Office of the Pension and Welfare Benefits Administration. The consent judgment was entered in the federal district court in Syracuse on October 19.

 Herman v. The Hull Corporation
Civil Action No. 98-CV-1616

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Archived News Release — Caution: Information may be out of date.

Contact Name: Rita Ford
Phone Number: 202.219.8921