Profit Sharing Plan Participants Formerly Employed by Simsbury, Connecticut, Employer Will Receive Pension Benefits

Archived News Release — Caution: Information may be out of date.

Boston, Massachusetts - Claywell Electric Company, Inc., of Simsbury, Connecticut, and company president Kurt Claywell have agreed that 31 former employees who participated in the company’s profit sharing plan will receive over $88,000 in pension benefits from the plan, as the result of a lawsuit filed by the U.S. Department of Labor alleging violations of the Employee Retirement Income Security Act (ERISA).

The agreement is part of an April 12, 2002, consent judgment signed by U.S. District Judge Dominic J. Squatrito that resolves the lawsuit the department filed earlier this month in the U.S. District Court for Connecticut.

According to James Benages, Boston regional director for the department’s Pension and Welfare Benefits Administration, the lawsuit alleged that in 1996 the defendants terminated from employment all but four of the employees of the company who were participants in the profit sharing plan, and discontinued contributions to the plan. At that point, under the Internal Revenue Code, participants in the plan should have been treated as fully vested in the plan. Instead they were treated as having forfeited the non-vested portions of their accounts.

The complaint alleges Claywell failed to make distributions to the terminated participants of the full amounts credited to their accounts. As a result Claywell, his wife, father and mother, who were the only remaining participants in the plan, improperly benefited. ERISA requires administrators of employee benefit plans to discharge their fiduciary duties to the plan solely in the interest of the participants and beneficiaries. The suit alleged Claywell breached this fiduciary duty and dealt with plan assets in his own interest or for his own account.

The consent judgment requires Claywell Electric Co., as administrator of the plan, to direct the current trustee of the plan to make distributions totaling $88,057.21 to certain participants who terminated employment with Claywell Electric from 1993 to 1996. The defendants agree not to participate in future violations of ERISA, and acknowledge that Claywell cannot act as a fiduciary with respect to any employee benefit plan covered by ERISA until May 2013.

The department’s legal action 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 number: 1.866.275.7922.

(Chao v. Kurt Claywell, Claywell Electric Company, Inc. and Claywell Electric Company, Inc. Profit Sharing Plan
Civil Action No. 302-CV-589DJS)

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