Labor Dept. Files Suit Against Woodland Hills Man For Federal Pension Violations

Archived News Release — Caution: Information may be out of date.

Los Angeles - The U.S. Department of Labor filed suit January 10, 2000, in the U.S. District Court for the Central District of California here against Royeric G. Pack, Sr., an individual, for violations of the Employee Retirement Income Security Act (ERISA) for failing to remit employee contributions and a participant loan repayment and for failing to collect employer contributions. Action Media Group 401 (k) Plan, an employee benefit plan, was named as a defendant in the suit as an indispensable party for total relief.

According to Billy Beaver, regional director for the Pension and Welfare Benefits Administration here, Pack was the president, sole shareholder and sole director of AMG, a New York corporation engaged in the business of selling advertising time for syndicated televison programs.

The department’s complaint alleges that AMG, incorporated on June 8, 1987, adopted the Plan on January 1, 1991; the Plan was a defined contribution plan providing for employee contributions and mandatory employer contributions.

According to the complaint, AMG paid its employees twice a month and employee contributions were made through salary reductions, and the amounts withheld were forwarded to mutual funds under the management of MFS Fundamental of Boston. The complaint alleges that Pack had sole signatory authority over AMG’s checking account. Matching employer contributions for the plan year were to be paid by June 30 of the following year.

For the 1995 plan year, $14,150 in matching employer contributions were not forwarded to MFS. For the pay period ending May 31, 1996, the department alleges that AMG withheld employee contributions but did not forward them to MFS, Beaver said.

According to the complaint, in addition to AMG, Pack was also the president, chief executive officer and sole shareholder of Tradewinds Television, LLC, located in Los Angeles, a California limited liability company engaged in the independent distribution of television programming. The complaint alleges that on June 1, 1996, AMG’s employees were hired by Tradewinds in their identical capacities and the new company simply added advertising sales to its business.

The complaint further alleges that on June 15, 1996, AMG employees began receiving payroll checks from Tradewinds Television, LLC, on the same schedule as AMG and the June 15 pay check covered the pay period from June 1 through June 15, 1996. From that date through December 31, 1996, according to the complaint, Tradewinds withheld employee contributions in the form of salary reductions but did not forward them to MFS.

The department alleges that the amount of withheld and unpaid employee contributions from May 31 through December 31, 1996, excluding a repayment to one employee for his December contributions, was $5,293. The department also alleges that matching employer contributions of $5,360 were also not forwarded to MFS for 1996 and that on August 31, 1996, a participant loan repayment of $244 was not forwarded to MFS.

According to Beaver, Pack has caused the Plan to suffer financial losses as a result of his breach of fiduciary responsibilities, obligations or duties or by engaging in prohibited transactions. The department is asking the Court to enter a judgment requiring that Pack restore to the Plan all losses, in the amount of $25,047 plus interest in an undetermined amount; that Pack be removed from his position as fiduciary of the Plan; that an independent fiduciary be appointed for the Plan, with full discretionary authority over its administration and assets; that Pack be permanently enjoined from serving as a fiduciary of or service provider to any employee benefit plan subject to ERISA; that Pack be permanently enjoined from any future violations of ERISA; and awarding the Secretary of Labor the costs of this action and providing such further relief as may be equitable and just.

Today’s court action was a result of an investigation conducted by the Los Angeles Regional Office of PWBA, headed by Beaver. It is part of an ongoing initiative to insure compliance with ERISA fiduciary standards with respect to timely deposit of employees’ contributions to 401 (k) plans.

Note to editors: Civil Action File No.00-00360 MMM (CWx)
(Alexis Herman, Secretary of Labor, United States Department of Labor v. Royeric G. Pack et al)

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