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News Release
401(k) Funds Restored to East Bay Workers Labor Department Assists Former Employees of Bankrupt Company
Archived News Release — Caution: Information may be out of date.
San Francisco, California - An East Bay business owner has agreed to restore nearly $34,000 in outstanding employee contributions and lost interest to his company’s 401(k) employee benefit plan. Under the terms of a consent judgment entered in U.S. District Court in San Francisco March 14, James C. Long, of Livermore, will repay $33,818.37 in employee contributions to the plan.
Participants in the affected plan worked for Discovery Ventures, Inc., doing business as Baking Machines, Inc. Forty-eight employees contributed to the plan since it was formed in January 1996.
A Labor Department investigation revealed that Long, who served as the plan’s trustee and fiduciary as well as company president, failed to forward employee contributions in a timely manner during the last two quarters of 2000 and failed to forward some or all contributions from that point until the companies closed in May 2001. Employee contributions withheld from biweekly paychecks should have been deposited to the plan account promptly.
The federal complaint alleges that instead of forwarding these contributions promptly to the plan, Long retained the contributions, commingled them in the company’s general accounts, and used the funds to meet corporate debts when the company’s cash flow was insufficient.
“These were not company funds that could be used to cover other company debts. This was money deducted from employee earnings to be held for them in trust as a benefit,” said Bette Briggs, regional administrator for the Pension and Welfare Benefit Administration in San Francisco, which investigated the case. Briggs said the Labor Department is working with Long to fully restore the employees’ contributions, plus lost earnings, to the plan. The full amount will be distributed to the plan participants.
As part of the agreement, Long will be permanently barred from serving as a fiduciary or service provider for any employee benefit plan covered by ERISA.
(Chao v. James C. Long and Baking Machines 401(k) Profit Sharing Plan
Civil Action No. C 02-1029 PJH)
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Archived News Release — Caution: Information may be out of date.