Labor Dept. Files Suit Against L.A. Computer Memory Companies, Individuals For Pension Violations

Archived News Release — Caution: Information may be out of date.

Los Angeles - The U.S. Department of Labor announced today it filed suit July 8, 1999, in the U.S. District Court for the Central District of California against two Los Angeles corporations; their president and majority shareholder; the companies’ pension plan; and the pension plan’s trustees for breach of fiduciary duties under the Employee Retirement Income Security Act (ERISA).

Named as defendants were Enhance Memory Products, Inc. and Enhance 3000, Inc., both corporations; Uri Nemet, president of the corporations; Enhance Memory Products, Inc. Target Benefit Pension Plan, an employee pension benefit plan; and Idit Nemet, who with Uri Nemet, served as trustee of the Plan.

According to David Ganz, Los Angeles regional director for the Department of Labor’s Pension and Welfare Benefits Administration (PWBA), the suit seeks full restitution from the defendants for all losses to the Plan due to their alleged fiduciary breaches, including lost interest and lost opportunity costs.

Between November 1992 and October 1995, Uri Nemet allegedly transferred money out of the Plan bank account with checks made out to EMPI, “cash” or to himself in an amount totaling $295,000. EMPI later made seven repayments totaling $295,000 to the Plan; however, the Plan received no interest on these amounts.

On February 6, 1996, Uri Nemet transferred $125,000 from the Plan’s bank account to EMPI. The complaint asserts that the Plan has received no principal or interest payment on this transfer. Furthermore, none of the assets of the Plan were held in income-producing accounts.

In addition, under the terms of the Plan, EMPI was required to pay contributions to the Plan in an amount necessary to provide participants with a defined monthly pension at retirement. For the Plan years ending Jan. 31, 1995, EMPI filed documents with the Internal Revenue Service and the Labor Department stating that it made a contribution of $48,878 to the Plan. According to the department, this contribution has never been received by the Plan.

Also, EMPI was required to make an employer contribution to the Plan in the amount of $49,906 for the Plan year ending January 31, 1996. EMPI has failed to make this contribution, the department further alleged.

The suit asks the Court to require the defendants to restore all losses, attributable to the fiduciary breaches, including lost interest and lost opportunity costs; to require the Plan to set off the Nemets’ individual Plan accounts against the losses caused by their alleged misconduct; to permanently forbid defendants Uri Nemet and Idit Nemet from serving as fiduciaries of or service providers to any employee benefit plan covered by ERISA; and to appoint an independ ent plan trustee for the Plan with full discretionary authority and power to manage and administer the Plan and its assets.

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 99-07029 RAP (RNBx)

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

Contact Name: Mike Shimizu
Phone Number: 206.553.7620