Defunct Georgia Lighting Company And Owner Sued For Abusing 401(K) And Health Assets

Archived News Release — Caution: Information may be out of date.

Georgian Art Lighting Designs, Inc. of Lawrenceville, Ga., and its owner have been sued by the U. S. Department of Labor for failing to deposit $48,988 of employee contributions into the company’s 401(k) plans and medical plan accounts.

Georgian Art Lighting, which manufactures decorative lighting fixtures, filed for Chapter 11 bankruptcy in 1997. The company sponsored a self-funded health plan and 401(k) plan for some 85 participants. Both the health and 401(k) plans were funded through weekly deduction of contributions from employees’ paychecks. The retirement plan had assets of $758,191 at the end of 1995.

According to the lawsuit, the company and its chairman Lyonel M. Joffre violated the Employee Retirement Income Security Act (ERISA) by failing to deposit employee contributions into trusts for the health plan and 401(k) plan. The defendants allegedly allowed $26,133 of employee contributions owed to the health plan to be used for the benefit of the company by commingling the contributions with the general assets of the company starting in August 1996.

The department also alleged that they improperly failed to remit to the 401(k) plan $22,855.50 in contributions withheld from employees’ paychecks during the months May through October 1996.

The lawsuit seeks a court order requiring the defendants to reimburse the plans for all losses with interest, removing Joffre from his position with the plans and permanently barring him from holding a position of trust to any plan governed by ERISA. The lawsuit also asks the court to appoint an independent manager to oversee the plans and distribute their assets upon termination.

The department conducted two investigations as part of a nationwide crackdown on abuse of employee money contributed to 401(k) and health benefit plans sponsored by private-sector employers. The Atlanta Regional Office of the Pension and Welfare Benefits Administration conducted the investigations into alleged violations of ERISA.

The lawsuit was filed Sept. 29 in federal district court in Atlanta.

(Herman v. Georgian Art Lighting Designs, Inc.)
Civil Action No. 1:99-CV-2535

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Archived News Release — Caution: Information may be out of date.

Contact Name: Gloria Della
Phone Number: 202.219.8921