401(k) Plan Trustee Agrees To Repay Participants Following Legal Action By U.S. Labor Department

Archived News Release — Caution: Information may be out of date.

Springfield, Massachusetts - Alan Scrivner, the president of bankrupt DataProfit Corp., has agreed to restore over $43,000 to five participants in the company’s 401(k) profit sharing plan, the U.S. Labor Department announced today.

The agreement is part of a February 27 consent judgment that resolves a Labor Department lawsuit filed in November alleging violations of the Employee Retirement Income Security Act, according to James Benages, Boston regional director for the department’s Pension and Welfare Benefits Administration.

The suit was filed in U.S. District Court in Springfield. The Labor Department alleged that Scrivner violated his fiduciary duties under ERISA by allowing $85,000 in loans from five plan participants to be deposited into the account of DataProfit Solutions, a party-in-interest of which Scrivner is the majority owner. This is a prohibited transaction under ERISA.

The suit also alleged that from November 2000 through March 2001, Scrivner failed to ensure that employee contributions and loan repayments totaling more than $370,000 were forwarded to the plan. In August, the department filed an adversary proceeding against Scrivner in his Chapter 7 bankruptcy proceeding to designate the withheld funds and improper loans as non-dischargeable debts. On March 20, 2002, the U.S. Bankruptcy Court approved a consent judgment designating Scrivner's $43,000 restitution obligation a non-dischargeable debt.

Scrivner neither admits nor denies the allegations. Under the order he agrees to pay the five plan participants restitution of $43,000 plus accrued interest. He is also permanently enjoined from serving as a fiduciary to any ERISA-covered employee benefit plan and from future violations of ERISA.

The judgment was predicated upon payment of $475,000 to the plan by its insurer to make up for contributions and loan repayments that were not forwarded to the plan, plus legal fees. That payment has been made. Steven Weiss, interim trustee of DataProfit Corp. has received authority from the court to oversee the plan’s termination and distribution of contributions to participants and beneficiaries.

The department’s legal action against the defendants followed an investigation by the Boston Regional Office of the Pension and Welfare Benefits Administration, located in Room 575 of the John F. Kennedy Federal Building in Boston. The telephone number is 617.565.9600. Long distance callers may reach the office through PWBA’s Toll-Free Employee & Employer Hotline: 1.866.275.7922.

(Chao v. Alan Scrivner; DataProfit Corporation 401(k) Profit Sharing Plan (01-CV-30202-FHF)
Chao v. Alan Scrivner 01-42770-HJB)

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.

Printer Friendly Version

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