U.S. Labor Department Sues Pennsylvania Trucking Company and Executives

Archived News Release — Caution: Information may be out of date.

Philadelphia, Pennsylvania - The U.S. Department of Labor has sued a Meshoppen, Pennsylvania trucking company, Penn's Best, Inc. and corporate executives for allegedly overpaying for stock purchased from the company's president to establish an employee stock ownership plan (ESOP).

The suit, filed December 21 in federal district court in Scranton, Pennsylvania names as defendants Penn's Best, its president and sole ESOP trustee Meredith W. Ruark, and comptroller and plan committee member Mark J. Stanley.

The suit alleges that the defendants caused the plan to pay an inflated price for stock it purchased from Ruark in 1994 to establish the ESOP. On August 22, 1994, the plan entered into a stock purchase agreement to buy 30 percent of the outstanding common stock, or 196,000 shares, from Ruark. The plan paid $4,103,373 or $20.94 per share. The department contends that this was far more than the plan should have paid if the stock were properly valued.

The department also is seeking a court order to remove the defendants from their positions with the plan, to permanently bar them from serving any employee benefit plan governed by the Employee Retirement Security Income Act (ERISA) and to appoint an independent fiduciary to administer the plan.

Penn's Best created the pension plan in 1993 for its employees. At the end of 1997, the ESOP had total assets of approximately $3,245,607 and 284 participants.

The investigation leading to the civil lawsuit was conducted by the Philadelphia Regional Office of the department’s Pension and Welfare Benefits Administration into alleged violations of federal pension law.

(Chao v. Meredith W. Ruark et al
Civil Action No. 3-CV01-2433)

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Archived News Release — Caution: Information may be out of date.