Labor Department Settlement Recovering Over $400,000 For Remarks, Inc. Pension Plan

Archived News Release — Caution: Information may be out of date.

The U. S. Department of Labor today obtained a consent order requiring the return of $420,333 on behalf of the pension plan and individual participants of bankrupt food distributor Remarks, Inc. of Dublin, Ohio as restitution for improperly causing the plan to pay inflated prices to buy company stock.

Under the court order, the money will be restored in the form of cash and/or forfeiture of benefits by certain defendants who were also participants. The court order also provides for the termination of the plan and distribution of its assets to eligible participants. In addition, the order retains Louann Jones and Greg Dadowski as trustees of the plan and allows the plan to obtain appropriate professional services needed to marshal and distribute the plan’s assets.

The court order resolves similar allegations contained in a private lawsuit which was consolidated with the Labor Department’s lawsuit.

Remarks began to have financial difficulties shortly after purchasing LVS Food Distributors through a subsidiary in 1990. By 1995, the company had laid off nearly all its employees and shut down operations. Creditors subsequently started involuntary bankruptcy proceedings against the company.

The pension plan is a combined profit sharing, employee stock ownership (ESOP) and 401(k) plan, which, as of 1994, covered 249 participants and had assets of $2,171,700. The plan originally was created as a profit sharing/401(k) plan and merged with the ESOP in 1991. Today, the shares of Remarks stock held by the ESOP and profit-sharing plan components are worthless.

The Department sued the trustees in 1997 alleging that they caused the plan to purchase stock of Remarks from the company and its executives at prices substantially above fair market value. They also allegedly failed to adequately monitor the appraiser of the stock and did not properly separate the ESOP and profit- sharing components of the plan.

Named as defendants were Remarks, Inc., Robert M. Stewart Sr., Malcolm J. Graves Jr., William W. Davis, Scott A. Hanhart, and the plan.

“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 Joseph Menez, director of the Cincinnati Regional Office of the Labor Department’s Pension and Welfare Benefits Administration (PWBA). “Employers and workers can reach us at 859/578-4680 for help with any problems relating to private-sector pension and health plans.”

This case resulted from an investigation conducted by the Department’s Pension and Welfare Benefits Administration into alleged violations of the Employee Retirement Income Security Act. The consent order was entered on July 19 in federal district court in Columbus, Ohio.

Herman v. Stewart
Civil Action No. C2-97-717

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