Labor Department Settles its Lawsuit Against Navcom Systems 401(k) Plan Officials

Archived News Release — Caution: Information may be out of date.

Two officials of the Navcom Systems, Inc. 401(k) plan of Manassas, Virginia agreed to forfeit their individual account balances to pay restitution to the plan as settlement of a lawsuit filed by the U.S. Department of Labor. The February 21 settlement requires Mary and Elijah Jackson to pay the plan a total of $89,000 according to an installment plan specified in the

The department's agreement also states that the Jacksons' debt to the plan is non-dischargeable in their bankruptcy proceedings. The Jacksons were removed from their positions with the plan and barred permanently from serving any other employee benefit plan governed by the Employee Retirement Income Security Act. Navcom Systems, Inc. also was removed as the plan administrator with the court naming Alan Kanter as the independent fiduciary to manage and terminate the plan.

The plan covered 165 participants and had in assets of $2.5 million as of September 30, 1997. The plan currently has a balance of $310,000 since distributions have been made to plan participants.

The department sued the Jacksons on April 4, 1999, for failing to remit more than $130,000 in employee contributions to the company's 401(k) plan. They owned Navcom Systems, Inc., Prestige Airways, Inc., and Navcom Aviation, Inc., three aviation service companies, which sponsored the pension plan, established in 1990. The plan stipulated that employee contributions would be withheld from employees' biweekly paychecks.
In November, 2000, the Labor Department also filed an adversarial action against the three companies, which filed for Chapter 7 bankruptcy in January, 2000. Cases against Prestige Airways and Navcom Aviation were closed as the defendants had no assets.

"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 Mabel Capolongo, director of the Philadelphia Regional and Washington District Offices of the department's Pension and Welfare Benefits Administration. "Employers and workers can reach us in Washington at 202.254.7013 for help with any problems relating to pension and health plans provided in the private sector."

The consent judgment/settlement resulted from an investigation conducted by the Washington district office into alleged violations of ERISA. It was entered in the federal district court in Alexandria, Virginia.

(Chao v. Mary Jackson, Elijah Jackson, Navcom Systems, Inc. et al
Civil Action No. 00-568-A)

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