Labor Department Sues Alabama Corporation And Plan Trustee For Failure To Timely Remit Employees' Money

Archived News Release — Caution: Information may be out of date.

An Anniston, Ala., non-profit corporation and the former trustee of its 401(k) profit sharing plan were sued by the U. S. Department of Labor on July 8 for failure to timely remit more than $11,000 of employee contributions to the plan.

Named as defendants in the lawsuit were Community Action Agency of Calhoun, Cleburne & Cherokee Counties, Inc. (CAA), the plan’s sponsor, and Dr. Nimrod Q. Reynolds, who was the corporation’s former executive director and the plan’s trustee.

CAA employees were required to contribute five percent of their compensation to the 401(k) profit sharing plan, which became effective on April 15, 1992. On Aug. 31, 1995, the plan had 95 participants and assets totaling $340,131.

The lawsuit alleged from Oct. 15, 1996, to June 30, 1997, CAA failed to remit to the plan $11,849.37 that was withheld from employees’ compensation for contribution to the plan, in violation of the Employee Retirement Income Security Act (ERISA). The funds were used to finance CAA’s operations.

The lawsuit seeks to:

• restore to the plan all losses, plus $462.95 of interest estimated on outstanding employee contributions through March 1999;

• have defendant Reynolds permanently bared from serving as a fiduciary to any employee benefit plan covered under ERISA; and

• require the plan to set off Reynold’s individual plan account in an amount necessary to restore the losses to the plan and redistribute that amount to the remaining participants.

The lawsuit resulted from an investigation conducted by the Atlanta Regional Office of the Pension and Welfare Benefits Administration into alleged violations of ERISA. The lawsuit was filed in the federal district court in Birmingham, Ala.

Herman v. Community Action Agency of Calhoun,
Cleburne & Cherokee Counties, Inc. et. al.
Civil Action No. CV 99 L-1747-E --

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Archived News Release — Caution: Information may be out of date.

Contact Name: Rita Ford
Phone Number: 202.219.8921