Former Officers Of Bankrupt Chantilly, Va. Engineering Firm Sued Over Misuse Of Pension Assets

Archived News Release — Caution: Information may be out of date.

The U. S. Department of Labor has sued the former officers of bankrupt Artech Corp. of Chantilly, Va., for failing to transmit employee contributions to the company’s profit sharing plan and diverting plan assets to pay corporate expenses.

Artech Corp. was an engineering firm for testing materials which ceased operations in 1996. The company sponsored the profit sharing plan for 52 participants and had approximately $150,000 in assets as of June 30, 1998. The plan allows employees to make voluntary contributions to the plan.

Named as defendants are Paul Lare, Fred Ordway, and Waltraud Jackson. At various times, these individuals both officers of Artech Corp. and trustees of the plan.

According to the lawsuit, the defendants Lare and Jackson violated their duties as fiduciaries under the Employee Retirement Income Security Act (ERISA) by:

— failing to remit employee contributions to the plan in a timely manner and

— commingling plan assets with corporate money and diverting plan money to pay corporate expenses

Ordway allegedly failed to take steps to remedy the improper actions of the other trustees.

The lawsuit seeks a court order requiring that the defendants restore to the plan all losses with interest and that assets restored to the plan be allocated to the accounts of all participants except the defendants. The department also asks the court to require current trustees Lare and Ordway to terminate the plan after the funds are restored and permanently bars all defendants from serving in positions of trust to any plan governed by ERISA.

Mabel Capolongo, Director of the Philadelphia Regional Office of the Pension and Welfare Benefits Administration (PWBA), said, “This case exemplifies our commitment to protect the hard-earned benefits of workers. Workers can help us protect their plan benefits by contacting our office at 215-596-1134 if they have questions or suspect abuse of their pension, health or other benefit plans.”
This case was investigated by the Philadelphia Regional Office of the department’s Pension and Welfare Benefits Administration into alleged violations of ERISA. The lawsuit was filed on March 28 in federal district court in Alexandria, VA.

(Herman v. Lare)
Civil Action No.00-522-A

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