Alabama Pharmaceutical Companies, Pension Plan Official Sued by Labor Department for Self-Dealing of Fund Assets

Archived News Release — Caution: Information may be out of date.

A U.S. Department of Labor lawsuit alleges that subsidiaries of Seagen Pharmaceuticals, Inc., a Delaware corporation with operations in Gadsden, Alabama and its pension plan administrator caused losses to the plan when they failed to forward participant contributions to the plan.

The lawsuit alleges that from February 1, 1997, through March 16, 1998, the defendants failed to forward participants’ contributions in a timely manner. In addition, from April 1, 1998 through February 1, 1999, they allegedly stopped sending the participants’ salary deferrals to the fund, resulting in an estimated $21,574.74 loss, plus lost earnings.

They allegedly used participant contributions to cover operating expenses of Seatrace Pharmaceuticals, Inc., a subsidiary of Seagen along with Seatrace DM, Inc. The parent company and subsidiaries are run by Oscar Hugh Campbell, president, secretary and chief executive officer, who is the named individual defendant in the lawsuit since he was the pension plan’s trustee and administrator.

The plan covered 14 active participants and had $33,054 in assets as of December 31, 1999. The plan was established by Seatrace in 1997 as the Seagen Pharmaceuticals 401(k) plan, with Seatrace as the plan sponsor and DM and Seagen as adopting employers and plan sponsors. The plan allows employees to defer 2 to 15 percent of their pay to the plan and to direct investment of those funds.

The lawsuit is seeking to have the court order the defendants to repay the plan for all losses, with interest or lost opportunity costs, and to permanently bar them from serving in a position of trust to any employee benefit plan subject to the Employee Retirement Income Security Act (ERISA).

“Our goal is to assure that consumers know the department is only a phone call away to help protect the benefits promised by employers,” said Howard Marsh, director of the Atlanta Regional Office of the department’s Pension and Welfare Benefits Administration, that conducted the investigation into violations of ERISA. “Employers and workers can reach us in Atlanta at 404.562.2156 for help with any problems relating to pension and health plans provided in the private sector.”

The investigation was filed February 5 in federal district court in the Northern District of Alabama in Gadsden.

(Herman v. Seatrace Pharmaceuticals, Inc., et al
Civil Action No. 01 BU 344-M)

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