Labor Department Recovers Funds For Schenectady Employee Benefit Plans

Archived News Release — Caution: Information may be out of date.

New York, New York - The owner of the Lawrence Group, Inc.(LGI). a Schenectady-based holding company for insurance-related subsidiaries, was ordered October 6 to pay the company's own 401(k) and three health plans $334,220.34. As part of the restitution LGI’s sole owner, Albert Lawrence, was ordered to waive his own $170,000 balance in the 401(k) plan and restore it to the plan. LGI previously settled with the Labor Department.

Lawrence also was barred permanently from serving as a fiduciary to any employee benefit plan governed by the Employee Retirement Income Security Act (ERISA). LGI's 401(k) plan had $9,490,756 in assets and 899 participants as of December 1995. In June 1997, the plan covered 350 participants, with assets of $8,123,000.

The court actions resolve a lawsuit filed December 18, 1997, alleging that LGI and Lawrence failed to promptly deposit employee contributions into the company's plans. In October 1996, they stopped transferring employee contributions to the savings plan and used plan assets for the company. Lawrence also allegedly failed to forward loan repayments to the savings plans until one or two months after the repayment amount was deducted from employees paychecks, and he ceased forwarding loan repayments to the plan at all in October 1996, allegedly also using these plan assets for the corporation's benefit.

In addition, Lawrence diverted employee contributions to the company's other employee benefit plans to the corporation's use. Misappropriated contributions included payments for continuation of health care coverage under COBRA from former employees. During 1996 and 1997, Lawrence received $20,627 from former employees for COBRA coverage and never remitted these amounts to the health plan or insurers. The lawsuit also cited Lawrence for failing to forward his employee' salary deferrals for dental plan coverage from October 1996 to April 1997. He paid only $3,898 in claims toward accumulated dental claims amounting to $40,609.

In August 1997, the Secretary of Labor filed proofs of claim in federal bankruptcy court to recover employee contributions to the benefit plans from the debtor's estate. The Lawrence Group, Inc., several other Lawrence-related companies and Albert Lawrence filed for bankruptcy on February 28, 1997.

A previous judgment was obtained against LGI's wholly owned subsidiary, Lawrence Health Care Administrative Services (LHAS), in December 1999. LHAS administered some 127 employee benefit plans including 48 plans covered by ERISA. The administrator allegedly misused funds of 18 of the ERISA plans to pay benefit claims on behalf of other clients including its own firm, the Lawrence Group, Inc.

The court actions resulted from an investigation conducted by the Boston Regional Office of the Pension and Welfare Benefits Administration. PWBA enforces the federal pension and employee benefit law. The judgment and order were filed in federal district court in the Northern District of New York in Albany.

(Herman v. Lawrence Agency and Albert W. Lawrence
Civil Action No. 97-CV-1853)

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