Labor Department Sues Chicago Corporation And Plan Trustee For Abuse Of Employee Plan Contributions

Archived News Release — Caution: Information may be out of date.

The U.S. Department of Labor filed a lawsuit in Chicago, Ill., against Lexington Securities, Incorporated, and its plan fiduciary Paul Maton for withholding $12,608.65 of voluntary employee plan contributions in violation of the federal pension law. The Lexington Savings Incentive Plan was established on Feb. 1, 1995, as a cash or deferred profit sharing plan.

The lawsuit alleged that during the period between May 1, 1995, through June 31, 1995, Lexington Securities, Incorporated withheld voluntary contributions from employees’ paychecks but failed to deposit them in the plan’s investment accounts. The contributions were held, instead, in the general assets of the corporation. It also alleged Maton allowed the corporation to retain the voluntary employee contributions and failed to ensure that they were deposited in the plan’s investment accounts. The savings incentive plan was also named as a defendant in the case.

The defendants’ actions violated provisions of the Employee Retirement Income Security Act (ERISA) that prohibits either direct or indirect transactions between an employee benefit plan and any related party in which the party benefits at the expense of the plan participants.

The lawsuit seeks to restore to the plan all losses incurred as a result of the defendants’ breaches; requires the plan to offset defendant Maton’s individual plan account against the amount of losses, including lost opportunity costs, resulting from his fiduciary breaches; requires Maton to undo any prohibited transactions in which he engaged or for which he is liable; and permanently bars Maton from serving as a fiduciary to any ERISA- covered employee benefit plan.

The lawsuit resulted from an investigation by the Chicago Regional Office of the Pension and Welfare Benefits Administration into violations of ERISA. The lawsuit was filed Nov. 10, 1998, in the federal district court in Chicago, Ill.

Herman v. Lexington Securities, Inc.
Civil Action No. 98-C-7180

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Archived News Release — Caution: Information may be out of date.

Contact Name: Rita Ford
Phone Number: 202.219.8921