Labor Dept. Files Suit Against L.A. Corporation, President For Pension Violations

Archived News Release — Caution: Information may be out of date.

Los Angeles - The U.S. Department of Labor announced today a suit was filed June 28, 1999, in the U.S. District Court for the Central District of California against a Los Angeles corporation, its president and its 401(k) profit sharing plan for breach of fiduciary duties under the Employee Retirement Income Security Act (ERISA).

Named as defendants were Bakery Industrial Services, Inc. (BIS); Michael D. Howe, president and sole shareholder of BIS; and the Bakery Industrial Services, Inc., 401(k) Profit Sharing Plan, an employee pension benefit plan.

According to David Ganz, Los Angeles regional director for the Pension and Welfare Benefits Administration, the suit seeks full restitution from Howe and BIS of all losses suffered by the Plan due to their alleged fiduciary breaches, including lost interest and lost opportunity costs.

Under the terms of the Plan, employees were permitted to make contributions to the Plan by designating amounts to be withheld from their paychecks. From August 5, 1996, through June 15, 1997, BIS withheld $12,447 from employees' paychecks. However, these contributions allegedly were not forwarded to the Plan but were instead commingled with the general assets of BIS.

Also, under the terms of the Plan, participants were permitted to borrow money from their Plan accounts and to later repay such loans by directing BIS to withhold money from their paychecks. BIS withheld $500 designated for repayment of a loan from one employee's paychecks but did not remit any of the money to the Plan, the department further alleged.

The suit asks the Court to require Howe and BIS to correct all prohibited transactions identified in the Complaint; to restore all losses attributable to the fiduciary breaches, including lost interest and lost opportunity costs; to require the Plan to set off Howe's individual Plan account against the amount of losses caused by his alleged misconduct; to remove Howe from his position as Plan fiduciary and permanently forbid him from serving as a fiduciary or service provider for any Plan covered by ERISA; and to appoint an independent fiduciary with full authority to manage the Plan.

Today's court action resulted from an investigation conducted by the Los Angeles Regional Office of PWBA, headed by Ganz.

Note to editors: Civil Action File Number 99-6643.

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

Contact Name: Mike Shimizu
Phone Number: 206.553.7620