Court Orders L.A. High-Tech Trustee To Repay Pension Plan Losses

Archived News Release — Caution: Information may be out of date.

Los Angeles - The U.S. District Court for the Central District of California here ordered Uri Nemet, president of a Los Angeles-based high-tech company, to repay $284,935 in losses he caused the company’s pension plan, the U.S. Department of Labor announced today.

According to Billy Beaver, Los Angeles regional director for the department’s Pension and Welfare Benefits Administration (PWBA), the Court held Nemet, trustee of the Enhance Memory Products, Inc. (EMPI) Target Benefit Pension Plan, personally liable for several violations of the Employee Retirement Income Security Act of 1974 (ERISA).

The Court found that Nemet violated ERISA when from November 1992 through February 1996, he caused the pension plan to make a series of cash transfers to EMPI and to himself, totaling $420,000, of which only $295,000 was repaid; he failed to collect on behalf of the pension plan required employer contributions totaling $98,149; and he kept all of the pension plan’s assets in a non-interest bearing checking account, denying the plan a reasonable rate of return.

Nemet was president of EMPI, a Los Angeles-based manufacturer and wholesaler of computer memory products. Under the terms of the pension plan, EMPI was required to make contributions to the plan in an amount necessary to provide participants with a defined monthly pension at retirement.

“In every instance, Nemet placed his personal interests and those of EMPI ahead of the interests of the plan’s participants,” Beaver said.

The Court ordered Nemet to pay $284,935 to restore the losses he caused to the pension plan, which includes compound interest to compensate for lost opportunity costs.

The other plan participants will recover their losses before Nemet is entitled to any recovery to his own plan account. The Court ordered Nemet’s personal plan account to be forfeited or offset against the full amount of the loss until all other plan participants receive distributions equal to 100 percent of the present value of their accrued vested benefits.

In addition, the Court removed Nemet from his position as trustee of the pension plan and appointed an independent fiduciary with full discretionary authority to manage, administer, and terminate the plan. The Court also forbid Nemet from serving as a fiduciary or trustee to any ERISA-covered employee benefit plan for five years.

“Our goal is to help protect the benefits promised to plan participants by employers,” said Beaver. “The action by the Court protects the participants in the EMPI pension plan from Nemet’s fiduciary breaches and mandates that he restore losses to the plan.”

This court action arose out of an investigation conducted by the Los Angeles Regional Office of the PWBA, headed by Beaver.

Herman v. Enhance Memory Products, Inc. et al
Civil Action No. 99-7029.

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