Labor Department Sues Trustee for Failure to Remit Employees' Contributions to Wisconsin 401(k)

Archived News Release — Caution: Information may be out of date.

Chicago, Illinois - The U. S. Department of Labor sued the president of Oshkosh, Wisconsin-based Summit Builders, Inc. on December 12 for failure to remit $21,054 in voluntary employee contributions to the company’s 401(k) plan while serving as the 401(k) plan trustee.

Summit Builders ceased doing business after filing for Chapter 7 bankruptcy on December 13, 1999. The 401(k) plan, sponsored by the company for eight participants, had assets of $7,996 as of May 26, 2000.

The Labor Department suit alleges that James A. Peterson violated his duties as a trustee under the Employee Retirement Income Security Act (ERISA) by misusing assets of the plan to benefit himself and Summit Builders. The contributions, which have never been forwarded to the 401(k) plan, were retained in the general assets of the company.

According to the suit, Peterson allegedly failed to transmit to the plan employee contributions for the period June 1997 to December 1999, did not pay any opportunity costs on the unremitted contributions, and failed to obtain a fidelity bond as required by ERISA.

The suit seeks a court order to require that Peterson repay any losses, including lost opportunity costs, and to offset his plan account to repay any losses. In addition, the suit asks the court to require Peterson to purchase a fidelity bond for the plan and to bar him permanently from serving as a fiduciary to any plan governed by ERISA.

The suit, filed in federal district court in Milwaukee, Wisconsin, resulted from an investigation conducted by the Chicago Regional Office of the Labor Department’s Pension and Welfare Benefits Administration into alleged violations of ERISA.

“This case exemplifies our commitment to protect the benefits promised to employees," said Ken Bazar, director of the Chicago Regional Office of the Labor Department’s Pension and Welfare Benefits Administration (PWBA). “Employers and workers can reach us at 312.353.0900 for help with any problems relating to private-sector pension and health plans.”

(Chao v. Peterson
Civil Action No. 01 C 1245)

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.