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News Release
Labor Department Settles Lawsuit With Ft. Lauderdale Bankruptcy Trustee
Archived News Release — Caution: Information may be out of date.
Ft. Lauderdale, Florida – The U.S. Department of Labor has settled its lawsuit against the Ft. Lauderdale-based, court-appointed Chapter 11 bankruptcy trustee of Atlantis Diagnostic Center, Inc. The trustee John P. Barbee will make restitution to the company’s profit sharing plan of $8,645.53, including lost opportunity costs.
The department filed a lawsuit against Barbee on December 20, 2001, alleging that he improperly transferred to the bankruptcy estate certain funds he knew were assets of the profit sharing plan. Barbee allegedly committed this act against the request of the Labor Department. He neither confirmed nor denied the allegations.
On November 2, 1995, the former trustee of the plan was convicted of embezzling from the retirement fund. On April 19, 1995, Atlantis Diagnostic Center filed voluntary Chapter 11 bankruptcy and Barbee was appointed September 29, 1995 to take over the company’s bankruptcy estate. Just 19 days after he received notice from the department of the existence of a plan account and of his potential fiduciary duties under the Employee Retirement Income Security Act (ERISA), Barbee withdrew the funds liquidating the plan account. This money was ultimately deposited in the bankruptcy estate and disbursed to creditors instead of being returned to the plan.
The department contended in its lawsuit that Barbee was never a named fiduciary of the plan but could be considered, however, a default fiduciary of the plan assets he removed.
The plan had $140,000 in assets as of December 30, 2001.
The court action resulted from an ongoing investigation by the department’s Miami District Office of the Pension and Welfare Benefits Administration, which has oversight of ERISA. The settlement agreement and consent order were entered on April 5 in the federal district court in Ft. Lauderdale.
(Chao v. John P. Barbee
Civil Action No. 01-7916
Case No. 95-21452-BCK-RVR U.S. Bankruptcy Court)
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Archived News Release — Caution: Information may be out of date.