Labor Department Sues Nashville Employer Over Failure To Put Employee Contributions Into 401(K) Plan

Archived News Release — Caution: Information may be out of date.

The U.S. Labor Department today filed a lawsuit against a bankrupt Nashville, Tenn.- based firm, its affiliate and 401(k) plan official for failing to forward employee contributions to the plan.

Defendants are Exterior Systems Unlimited, Inc.(ESU), its wholly-owned subsidiary P&E Electric Co., Inc., and Michael F. Perkerson. Perkerson has served as chief executive officer and chairman of the board of both companies as well as the plan’s trustee and an officer of another wholly-owned subsidiary, whose employees participated in the plan.

According to the lawsuit, there were 169 participants in the plan and assets totaling $1,507,571 as of June 30, 1998.

The lawsuit alleges that employee contributions withheld from P&E and ESU payrolls from October 1996 to July 1997 were not forwarded to the plan, but instead were used to finance corporate operations of ESU and the subsidiaries. The firms’ bankruptcy trustee John H. Bailey, III, who was appointed in 1997, asserts that the unremitted employee contributions totaled $156,918.99.

The Labor Department is seeking to have the defendants ESU, P&E and Perkerson restore all losses to the plan with interest. In addition, the department asks to have Perkerson permanently barred from serving as a fiduciary or having control over the assets of any employee benefit plan subject to the Employee Retirement Income Security Act, and that his individual plan account offset any losses and be reallocated to remaining participants in the plan.

The lawsuit is the result of an investigation conducted by the Atlanta Regional Office of the department’s Pension and Welfare Benefits Administration into alleged violations of federal pension law. It was filed in federal district court in Nashville.

(Herman v. Exterior Systems Unlimited, et al)
Civil Action # 3:99-785

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Archived News Release — Caution: Information may be out of date.

Contact Name: Sharon Morrissey
Phone Number: 202.219.8921