Labor Department Recovers Over $300,000 for Youngstown, Ohio Corporate Profit Sharing Plan

Archived News Release — Caution: Information may be out of date.

Cincinnati, Ohio - Youngstown, Ohio-based Spike Industries, Inc. agreed to a consent order and judgment on Thursday, May 31, restoring $301,555.44 to the profit sharing plan as restitution for improperly loaning plan assets to the company and failing to timely forward employee contributions to the plan. Spike Industries manufactures railroad spikes.

The judgment also requires that the company and trustee James H. Smith submit recommendations on an independent fiduciary to manage the plan. After the fiduciary is appointed, they are permanently barred from serving any plan governed by federal employee benefit law, except fully-insured welfare plans.

Under the judgment, Smith must waive his right to benefits under the plan totaling $390,002.31 until Spike Industries reimburses the plan.

The department’s lawsuit, filed simultaneously with the judgment, alleges that Spike Industries and Smith violated the Employee Retirement Income Security Act (ERISA) when they:

• Made a series of improper loans to Spike Industries from May 1994 to January 1999
• Authorized a plan loan of $41,000 to Smith
• Failed to timely remit employee salary deferral contributions to the plan.

This case, filed in federal district court in Cleveland, Ohio, resulted from an investigation conducted by the Cincinnati Regional Office of the department’s Pension and Welfare Benefits Administration into alleged violations of ERISA.

“This action reaffirms our commitment to protect the hard-earned benefits promised by employers,” said Joseph Menez, director of PWBA’s Cincinnati Regional Office. “Employers and workers can reach us at 859.578.4680 for help with any problems relating to private-sector pension and health plans.”

(Spike Industries, Inc.
Civil Action No. 4:01CV1319)

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Archived News Release — Caution: Information may be out of date.