Wade & Sons Pension Plan Trustee Sued For Making Improper Loans

Archived News Release — Caution: Information may be out of date.

The U.S. Department of Labor has filed a lawsuit alleging that Wade & Sons, Inc. and its owner improperly transferred funds from the company’s profit sharing plan, thereby resulting in more than $146,600 in losses to the plan.

According to the department’s lawsuit, company President George Phelps Wade, who is the sole trustee of the plan, allegedly arranged for the fund to loan the company a total of $92,000 between July, 1991, and September, 1997. In addition, the lawsuit alleges that the plan also transferred $76,600 directly to Wade between January, 1991, and January, 1994. The loans and/or transfers were made without formal documentation, interest payments or collateral.

Prior to the filing of this lawsuit, the defendants repaid $22,000 of the loans, leaving a balance owed of $146,000, plus the lost opportunity cost to invest those funds in a prudent investment vehicle. The plan had 22 participants and assets totaling $154,333 as of Dec. 31, 1998. Wade & Sons, Inc., based in Macon, Ga., specialized in industrial repairs and replacements for manufacturing equipment.

The lawsuit asks the court to order the defendants to restore to the plan all of the losses, including the lost earnings or interest, and to offset any claims that Wade might have against the plan. It also asks that Wade be removed from his position with the plan, permanently barred from serving this or any other plan subject to the Employee Retirement Income Security Act (ERISA), and a successor trustee be appointed to take over the plan’s operation and, if necessary, to terminate the plan.

The lawsuit is the result of an investigation conducted by the department’s Atlanta Regional Office of the Pension and Welfare Benefits Administration. It was filed Dec. 12 in federal district court in Macon, alleging “self-dealing” violations of the federal pension law.

(Herman v. Wade & Sons, Inc.)
Civil Action # 5:00-CV-583-3

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Archived News Release — Caution: Information may be out of date.