Monroe, N.C. Officials Sued For Misuse Of Pension And Health Benefit Assets

Archived News Release — Caution: Information may be out of date.

Officials of the now-defunct Laminated Top Company, Inc. of Monroe, N.C. were sued today by the U.S. Department of Labor for allegedly using plan assets to make improper participant loans from the 401(k) plan and using employee contributions to operate the company rather than deposit the money in the company’s 401(k) and health plans.

Named as defendants were Patrick O. Healy and John F. Healy, both trustees of the plans and president and vice president, respectively, of Laminated Top Company. The company manufactured laminated counter tops for furniture used in school laboratories and medical facilities until it ceased operations in June, 1997.

The 401(k) plan, which was converted to a profit sharing plan in 1996, and the health plan covered as many as 14 participants. As of December 1996, the 401(k) plan had $312,540.56 in assets after the plan was converted to a profit sharing plan.

According to the lawsuit alleges, the defendants violated their duties as trustees under the Employee Retirement Income Security Act when they failed to:

• account for a $3,225 discrepancy in assets upon the transfer of assets to another financial custodian;
• maintain adequate records of loan repayments;
• remit $3,788.60 in employee contributions and certain participant loans to the 401(k) plan;
• collect certain outstanding participant loans owed to the 401(k) plan and made loans to participants which caused their account balances to be reduced to zero — including $90,000 in loans to defendant Patrick Healy, and
• remit $3,067.47 in health premiums deducted from the paychecks of participating employees, instead using the funds to operate the business and causing the health coverage to lapse.

In addition, the defendants deducted insurance premiums for non-existent dental benefits. They also failed to notify participants that health insurance with the insurer had lapsed and did not obtain fidelity bonding as required by ERISA.

The lawsuit seeks a court order to appoint an independent fiduciary to take over these plans and to terminate the plans and distribute any assets. The department also seeks to have the Healys restore to the plans all losses including interest, to bar them permanently from serving any plans covered by ERISA. The department further asks that any recouped money be re-distributed to other participants in the plan, which it considers to be abandoned.

The lawsuit is the result of an investigation conducted by the department’s Atlanta Regional Office of the Pension and Welfare Benefits Administration, which enforces ERISA. The lawsuit was filed on Feb. 28 in federal district court in Charlotte, N.C.

(Herman v. Laminated Top Company, Inc. John F. and Patrick O. Healy)
Civil Action # 3:00-CV 91-MU

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