LABOR DEPARTMENT SEEKS TO RECOUP 401(K) PLAN LOSSES FROM FORMER LOUIS ALLIS COMPANY PRESIDENT

Archived News Release — Caution: Information may be out of date.

The U.S. Department of Labor filed a adversary complaint asking the bankruptcy court in Milwaukee not to discharge any debt the former president of the bankrupt Louis Allis Co., Daniel E. Stetler, III, may have for any liability arising from his alleged violations of Title I of the Employee Retirement Income Security Act, in an effort to begin recouping monies owed to participants of the company-sponsored 401(k) plans.

The department’s complaint against Stetler of Greendale, Wis., a 41% owner of the common stock of Louis Allis Co. and a member of its board of directors, concerns his own Chapter 7 bankruptcy filing of Jan. 19, 1999. Today’s Labor Department action is a prelude to filing a civil complaint against Stetler and the company’s plans in federal district court in the Eastern District of Wisconsin, requesting relief under ERISA, to regain approximately $176,000 in losses to the plans. The amount includes employee contributions deducted from paychecks but not forwarded to the company’s two 401(k) retirement plans.

According to the department’s civil complaint, when the company filed its own Chapter 7 bankruptcy petition on Oct. 20, 1998, Louis Allis Co. did not appoint a trustee or plan administrator to replace itself with the plans and even now no individual or entity has been appointed to operate the plan. Thus, the department’s civil lawsuit requests that the court:

• appoint an independent fiduciary to manage and, ultimately, liquidate the pension plans;
• set off Stetler’s own individual account in the non-union employee 401(k) plan to pay the lost monies to participants of that plan, and
• permanently bar him from exercising any fiduciary authority over any ERISA employee benefit plans.

Louis Allis Co. established its union and non-union employee 401(k) plans in 1994 and, during the period of June 28 to Oct. 4, 1998, the company allegedly withheld voluntary employee contributions to the plans and failed to remit them to the plans’ investment accounts. During the period of June 28 to Sept. 25, 1998, the complaint alleges that Stetler had discretionary authority or control to determine when or whether these employee contributions were withheld, forwarded to the plan or commingled with the company’s assets.

The department alleges Stetler exercised this control, thus making him responsible for the plans’ losses. According to the plans’ 1997 annual reports, there were 180 participants and assets of $3,060,707 in the 401(k) plan for union employees, and 146 participants with assets of $4,892,249 in the non-union plan. Louis Allis Co., a maker of large electric motors and generators, is in the process of having its company assets sold to pay its debts.

The legal actions pertaining to the company’s pension plans resulted from an investigation conducted by the Chicago Regional Office of the department’s Pension and Welfare Benefits Administration into alleged violations of the federal pension law.

(Herman v. Daniel E. Stetler III, debtor )
Adversary Complaint in Bankruptcy Court
Civil Action No. 99-2192

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

Contact Name: Sharon Morrissey
Phone Number: 202.219.8921