Labor Department Files Lawsuit Against Manassas, Va., Trustees For Failure To Remit 401(K) Employee Contributions

Archived News Release — Caution: Information may be out of date.

The U.S. Department of Labor has sued the owners and officers of three Manassas, Va., corporations, for failure to remit more than $130,000 in employee contributions to the corporations’ 401(k) plan.

Mary and Elijah Jackson owned Navcom Systems, Inc., Prestige Airways, Inc., and Navcom Aviation, Inc., three aviation service companies, which sponsored the Navcom Systems 401(k) plan, established in January 1990. The Jacksons were trustees of the 401(k) plan and Navcom Systems, Inc. was the plan’s administrator. The plan stipulated that employee contributions would be withheld from employees’ bi-weekly paychecks.

The department’s lawsuit alleged beginning in April 1994 and continuing through 1997, the Jacksons withheld $131,145 of contributions from the paychecks of Navcom Systems, Inc.’s employees, but failed to timely remit the money to the plan.

Plan administrator Navcom Systems, Inc. allegedly failed to correct the Jacksons’ breaches and to file the plan’s Form 5500 from 1996-1998. Prestige Airways, Inc. and Navcom Aviation, Inc. were alleged to have failed to timely forward employee contributions from corporate accounts into the plan.

The lawsuit asks the court to: remove the Jacksons and Navcom Systems, Inc. from their positions with the plan and replace them with an independent fiduciary to manage and dispose of the plan’s assets; require the Jacksons and the three corporations to restore to the plan all losses, plus interest; and to permanently bar the defendants from servicing any plan covered under the Employee Retirement Income Security Act (ERISA).

“Our goal is to assure consumers that the department is only a phone call away to help protect benefits promised by employers,” said Mabel Capolongo, director of the Labor Department’s Philadelphia Regional Office of the Pension and Welfare Benefits Administration (PWBA). “Employers and workers can reach us at (202) 254-7013 in Washington, D.C., for help with any problem relating to private-sector pension and health plans.”

The lawsuit was filed April 4 in the federal district court in Alexandria, Va., and results from an investigation by the Washington District Office of the Philadelphia Region of PWBA into violations of ERISA.

Herman v. Jackson
Civil Action No. 00-568-A

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