Labor Department Sues Illinois Company and Owner Over Misuse of Pension Assets

Archived News Release — Caution: Information may be out of date.

Chicago, Illinois - The U.S. Department of Labor today sued Packaging Graphics, Inc., a defunct Maywood, Illinois. Company, and its president for failure to remit employee contributions to the company’s 401(k) plan and failure to collect participant loan payments owed to the plan.

The suit, filed in federal district court in Chicago, alleges that corporate president Kenneth Boese withheld contributions from employees’ paychecks from July 30, 1999 through June 15, 2001 and failed to remit the contributions at all. From April 1, 1998 through April 7, 2000, Boese failed to remit the employees’ contributions in a timely manner. The suit alleges that the employee contributions were held in the general assets of the company.

Boese, the sole trustee of the plan, also allegedly took out a $17,500 participant loan from his individual account balance and failed to make a single payment on the loan.

The department is seeking a court order to require an offset of Boese’s individual plan account for any losses owed to the plan, including lost opportunity costs, to reallocate the offset to the accounts of other plan participants, to permanently bar Boese from serving any employee benefit plan governed by the Employee Retirement Income Security Act (ERISA), and to appoint an independent fiduciary to administer and terminate the plan.

Boese filed for Chapter 7 personal bankruptcy on July 27, 2001. The department filed an adversary complaint in bankruptcy court on October 26, 2001, alleging violations of ERISA. The court actions seeks to prevent Boese from discharging any debts owed to the plan under the bankruptcy proceeding.

As of Decrmber  31, 2000, the plan had approximately 34 participants and $193,907 in assets.

The Chicago Regional Office of the department’s Pension and Welfare Benefits Administration conducted the investigation leading to the lawsuit alleging violations of federal pension law.

(Chao v. Packaging Graphics, Inc.
Civil Action No. 01-C-9252)
(Chao v. Kenneth Boese
Chapter 7 Bankruptcy Action No. 01-26069)

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Archived News Release — Caution: Information may be out of date.