CFO of Deleware Corporation Avcon, Inc., Ordered to Pay Restitution

Archived News Release — Caution: Information may be out of date.

Los Angeles, California - The U.S. Department of Labor obtained a consent judgment on July 25, 2001, in federal court requiring John N. Cowles, former chief financial officer of Avcon, Inc., to restore $12,000 to the company’s 401(k) Plan.

The judgment also bars Cowles for six years from serving as a fiduciary or service provider to any employee benefit plan subject to the federal Employee Retirement Income Security Act.

Avcon, Inc., a California-based Delaware corporation, was in the business of developing products that used magnetic levitation bearing systems.

The judgment resolves a suit filed February 22, in which the Labor Department alleged the defendants violated ERISA by improperly handling plan assets. The complaint alleged that as chief financial officer Cowles exercised discretionary authority for the administration of the plan on behalf of Avcon, Inc., which included deciding when to forward workers’ contributions along to the plan.

Avcon, Inc. and Cowles allegedly failed to forward contributions withheld from employees’ paychecks to the company’s 401(k) plan. The defendants also were alleged to have delayed the forwarding of employee contributions to the pension plan from March 6, 1996, until May 22, 1998.

Billy Beaver, director of Los Angeles Regional Office of the department’s Pension and Welfare Benefits Administration, said, “This case exemplifies our commitment to protect the hard-earned benefits of workers. Workers can help us protect their plan benefits by contacting our office at 626.583.7862 if they have questions or suspect abuse of their pension, health or other benefit plans.”

The consent judgment was entered in federal district court in the Central District of California. This case resulted from an investigation conducted by the Los Angeles Regional Office of the Labor Department’s Pension and Welfare Benefits Administration into alleged violations of ERISA.

(Chao v. Cowles, et al.
Civil Action No. CV-01-1737 MMM (Mcx))

U.S. Department of Labor news releases are accessible on the Internet. The information in this news release will be made available in alternate format upon request (large print, Braille, audio tape or disc) from the Central Office for Assistive Services and Technology. Please specify which news release when placing your request. Call 202.693.7773 or TTY 202.693.7775.

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