Labor Department Alleges GMR Plastics Failed To Forward Employee Contributions To Pension Plan

Archived News Release — Caution: Information may be out of date.

The U.S. Department of Labor today filed a lawsuit alleging that GMR Plastics Corp. in Wayne County, Michigan and Gary M. Raykhinshteyn, the company’s owner and operator, failed to remit employee contributions to the plan, thereby causing eight participants to lose over $11,000.

The Labor Department’s lawsuit alleges that the withholdings of the participating employees were commingled with the general assets of GMR and used for the benefit of the company or Raykhinshteyn. The suit also alleges that the plan did not have a fidelity bond as required by federal pension law.

According to the lawsuit, between Februayr 2, 1996 and March 27, 1998, contributions were remitted to the service provider from 13 days up to 89 days following pay periods. From July 11, 1997 to March 27, 1998, no withheld employee contributions were remitted to the plan. The amount of contributions not remitted is approximated at $8,888.92 plus $2,609 in lost interest, representing a loss to the plan of $11,509.

The company, a subchapter S corporation engaged in the production of plastic parts and products, went into receivership on April 17, 1998, and the receivership was dissolved on December 11, 1998. The company had a simplified employee pension plan (SEP-SAR) with participants voluntarily electing to make salary deferrals to the plan. Employer contributions to the plan were discretionary.

The lawsuit is seeking to have the court order:

• The defendants to repay the plan for losses, plus interest, including requiring Raykhinshteyn’s individual account to be set off to pay the losses if they are not otherwise satisfied
• The removal of Raykhinshteyn from his position with the plan
• His permanent disbarment from acting as a fiduciary to any plan covered by the Employee Retirement Income Security Act (ERISA).

In addition, the court is asked to name an independent fiduciary to manage the plan.

“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 Joseph Menez, director of the Cincinnati Regional Office of the department’s Pension and Welfare Benefits Administration. “Employers and workers can reach us in Cincinnati at 859.578.4680 or in the agency’s Detroit District Office at 313.226.7450 for help with any problems relating to pension and health plans provided in the private-sector.” The Cincinnati office conducted this investigation.

The lawsuit was filed on March 9, 2001 in the federal district court in the Eastern District of Michigan in Detroit.

(Chao v. Gary Raykhinshteyn
Civil Action No. 01-60056)

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