Labor Department Sues Fridley, Minn., Company Official For Failing To Remit Employee Contributions To 401(K) Plan

Archived News Release — Caution: Information may be out of date.

A Fridley, Minn.-based company and its 401(k) plan official have been sued by the U.S. Department of Labor for failing to forward withheld employee contributions to the plan in a timely manner, and, when subsequently repaying the plan $97,767.57 of the delinquent contributions due to the plan, further failing to repay plan lost opportunity costs to plan participants for the defendants’ use of the money. Using the plan’s rate of return, the department calculated that $37,866 in lost interest earnings is still owed the plan.

Med-Voc Associated, Inc., which provides rehabilitation counseling for worker’s compensation claimants, and its sole owner/plan trustee Michael W. Evavold allegedly withheld voluntary employee contributions to the 401(k) plan on an intermittent basis from May 1993 to July 1997, retained these contributions for Med-Voc’s own general assets and failed to remit those amounts promptly to the plan’s investment account.

In addition, the department’s lawsuit alleges that the defendants failed to obtain a fidelity bond in the minimum amount of ten percent of the plan funds. The plan had 37 participants and total assets of $579,588 as of June 30, 1998.

The lawsuit seeks to have the lost opportunity costs paid to the plan, for an adequate fidelity bond to be obtained and for Evavold to be barred permanently from serving in any fiduciary capacity to any employee benefit plan covered by the Employee Retirement Income Security Act (ERISA).

“Our goal is to assure that consumers know that the department is only a phone call away to help protect the benefits promised by employers,” said Gregory Egan, director of the Kansas City Regional Office of the department’s Pension and Welfare Benefits Administration, which conducted the investigation into alleged violations of the federal pension law. Employers and workers can reach the Kansas City office at (816) 426-5131 for help with any problems relating to private-sector pension and health plans.

The complaint was filed in the federal district court in Minneapolis on April 17, 2000.

(Herman v.Med-Voc Associates, et al )
Civil Action No. 00-CV-978 ADM/AJB

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Archived News Release — Caution: Information may be out of date.