Labor Department Obtains Final Judgment over Misuse Of Houston-Based Pension Plan Assets

Archived News Release — Caution: Information may be out of date.

The U. S. Department of Labor has obtained a consent order and judgment requiring the trustees and administrator of the Houston-based Superior Engine Rebuilding Co. Profit Sharing Plan to repay $222,578 to the plan. The court order also appointed an independent manager to oversee the plan.

The order and judgment resolve a lawsuit filed by the Labor Department in March 1999 against corporate directors Linda K. Williams and David C. Zingelmann along with Superior Engine Rebuilding. The lawsuit alleged that the defendants violated the Employee Retirement Income Security Act (ERISA) by using assets of the profit sharing plan for their personal use and to pay corporate debts.

The profit sharing plan, covering as many as 32 employees, was sponsored by the Houston company. The now-defunct company filed for bankruptcy in 1996.

Under the court order, Brooks Hamilton, of the Dallas-based firm Brooks, Hamilton & Associates, Professional Employee Benefit Service, was appointed as the independent fiduciary. The independent fiduciary has authority to collect all money owed to the plan, to distribute all plan assets to eligible plan participants and to terminate the plan after distributing all of its assets.

Defendant Williams and Zingelmann also were removed from their positions with the profit sharing plan and permanently barred from serving in positions of trust to any plan governed by ERISA in the future. The defendants have fully repaid the restitution ordered by the court and have agreed to pay a civil monetary penalty of $44,515.60 when assessed by the Labor Department.

These agreements were signed Jan. 20, 2000 by the department’s representatives. The department obtained an earlier consent order and judgment, entered on Oct. 5, 1999 in federal district court in Houston, based on an investigation conducted by the Dallas Regional Office of the Labor Department’s Pension and Welfare Benefits Administration (PWBA) into alleged violations of ERISA.

In a separate case, the department obtained a settlement agreement with Larry Blake, a former trustee of the Profco, Inc. Profit Sharing 401(k) Plan, requiring him to pay $1,650 to the Houston-based plan in final resolution of a lawsuit filed in May 1998. The plan has received cumulative restitution of $93,025.96 as a result of the department’s legal action. The department’s lawsuit alleged that these and other defendants failed to deposit employees’ contributions and loan repayments with the trust account for the plan in violation of ERISA.

Bruce Ruud, Regional Director for PWBA’s Dallas office said, “These cases exemplify the department’s commitment to ensure that participants are not deprived of their promised retirement benefits. Participants who feel they may have a problem with their pension, health or other employee benefit plans should call us at (214) 767-6831.”

(Herman v. Superior Engine Rebuilding)
Civil Action No. H-99-0808
(Herman v. Profco)
Civil Action No. H-98-1406

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