COURT APPOINTS INDEPENDENT TRUSTEE TO OPERATE FLORIDA 401(K) PLAN

Archived News Release — Caution: Information may be out of date.

A Federal District Court in Miami, Fla. has appointed an independent trustee to manage and terminate the 401(k) plan of Hollywood, Fla.-based Carolina Fitness Equipment, Inc. under a settlement agreement obtained by the U. S. Department of Labor.

Under the settlement, the court appointed M. Larry Lefoldt of Lefoldt & Co., located in Jackson, Miss., as the independent manager of the plan with authority to terminate and distribute assets of the 401(k) plan. Harvey Miller and Edwin B. Beam Jr. also were removed from their positions as trustees of the plan.

Carolina Fitness, a North Carolina corporation, was a retailer of exercise equipment. Carolina Fitness was sold in February 1994 to Bio-Dyne North Corporation of Atlanta, which relocated the company’s operations to Florida. The company ceased operating Aug. 23, 1996.

The company sponsored the 401(k) plan for 58 participants. The plan, which has not been formally terminated, had assets of $361,929 as of Sept. 30, 1998. According to the lawsuit, no employer or employee contributions have been made to the plan since July 1996.

The Labor Department’s lawsuit, filed on Dec. 3, 1998, alleged that Miller and Beam terminated employment with the company in July 1996 but did not resign formally as trustees of the plan or notify the plan’s third-party administrator or group annuity contractor of their resignation as plan officials. Carolina Fitness also allegedly failed to appoint replacement trustees for Miller and Beam or successor fiduciaries to manage and operate the plan. Participants allegedly were unable to direct their investments among the different options available under the plan and the company and trustees failed to respond to participant inquiries.

The settlement and consent judgment resulted from an investigation conducted by the Atlanta Regional Office of the department’s Pension and Welfare Benefits Administration into alleged violations of the Employee Retirement Income Security Act. The consent judgment was entered on April 5 in the federal district court in Miami.

(Herman v. Carolina Fitness Equipment, Inc.)
Civil Action No. 98-7367-CIV-GOLD

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Archived News Release — Caution: Information may be out of date.

Contact Name: Sharon Morrissey
Phone Number: (202) 219-8921