Labor Department Sues Former Executives of Employee Leasing Firm for Misusing Plan Assets

Archived News Release — Caution: Information may be out of date.

The U.S. Department of Labor has obtained a consent judgment which includes a money judgment for $18,432 against the former operators of bankrupt U. S. Staffing, Inc., a Houston, Texas, employee leasing firm, for misusing plan assets to benefit others.

The judgment also permanently bars W. Sherman Adcock and James D. Smith from serving in positions of trust to any other employee benefit plans.

U.S. Staffing, Inc. provided payroll administration and health insurance benefits for employees of small businesses. The judgment resolves a lawsuit filed October 16, 2000 alleging that the defendants violated ERISA by improperly handling plan assets. At the time of the improper actions, Adcock and Smith were officers and directors of U.S. Staffing, Inc., and a third defendant, Cruz C. Alderete, was purportedly the administrator of the trust.

Adcock and Smith allegedly failed to transmit to the plans' trust account contributions withheld from employee paychecks over the period September 1994 to March 1995. The defendants also were alleged to have transferred and used $10,155 in plan assets as collateral and payment for a loan to benefit a party-in-interest. In addition, defendants Adcock and Smith used $3,000 of plan assets to pay legal expenses for a transaction for which the plan received no benefit.

"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 Bruce Ruud, director of the Dallas Regional Office of the department's Pension and Welfare Benefits Administration. "Employers and workers can reach us at 214.767.6831 for help with any problems relating to private-sector pension and health plans."

The consent judgment was entered on January 29, 2001 in federal district court in Houston. The case resulted from an investigation conducted by the Dallas Regional Office of the Labor Department's Pension and Welfare Benefits Administration into alleged violations of ERISA.

(Herman v. Adcock
Civil Action No. H-00-3650)

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Archived News Release — Caution: Information may be out of date.