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News Release
Warwick, Rhode Island Company and Officers Agree to Settle Federal Lawsuit Alleging Misuse of Employee Profit Sharing Plan Funds
Archived News Release — Caution: Information may be out of date.
Boston, Massachusetts - Central Scale Company of Warwick, Rhode Island, has agreed to repay $600,000 to the Central Scale Profit Sharing Plan to settle a lawsuit filed against the company, its president and vice president by the U.S. Department of Labor in October 2000. The suit alleged violations of the Employee Retirement Income Security Act (ERISA).
The agreement is part of a May 3, consent judgment that resolves the lawsuit. The company agreed to the judgment, as have company president Robert Geisser and vice president Matthew Geisser, both of whom served as trustees of the profit sharing plan, which was set up for company employees in 1979.
The suit charged Robert and Matthew Geisser, who are brothers, with making an improper $80,000 loan from the plan to a relative and failing to collect any interest or principal on the loan. The suit alleged the Geissers also made unexplained withdrawals; caused the plan to hold a similarly unsecured and uncollected $111,931 loan made to friends of Matthew Geisser; and caused the plan to buy and sell high risk stocks, which were traded among the plan, the company and Matthew Geisser.
ERISA requires plan officials to administer plans solely in the interest of the participants and beneficiaries for the exclusive purpose of providing benefits to them, according to James Benages, Boston regional director for the Labor Department’s Pension and Welfare Benefits Administration.
The consent judgment orders the company to repay $600,000, plus interest, to the plan, in installment payments ending in February 2007. The Geissers have secured a promissory note for $540,000 with mortgages on their properties, and have agreed to offset their account balances in the plan for the benefit of the other participants and beneficiaries. The company paid the $60,000 difference between the promissory note and the judgment amount on May 10.
In addition, the judgment requires the defendants to seek repayment of the larger of the illegal loans and to restore the $140,000 total involved in that loan by February 28, 2007. The Geissers have already repaid the loan made to their relative, plus interest and are enjoined for ten years from serving as fiduciaries to any plan covered by ERISA. They also are ordered to cooperate fully with the independent trustee who now controls the plan’s assets.
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: 1.866.275.7922.
(Chao v. Central Scale Company, et al)
Civil Action No. 00-525-T
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Archived News Release — Caution: Information may be out of date.