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News Release
Defunct Illinois Corporation Sued Over Employee Pension Contributions and Loans
Archived News Release — Caution: Information may be out of date.
Chicago, Illinios - The U.S. Department of Labor sued the defunct Chicago-based Tomko Machine Works, Inc., and its vice president on May 29, 2002, for misusing $120,882 in employee contributions and participant loan payments owed to the company’s profit sharing 401(k) plan.
“This action reaffirms our commitment to protection of the hard-earned benefits promised by employers,” said Kenneth M. Bazar, Director of the Chicago Regional Office of the Pension and Welfare Benefits Administration (PWBA) which investigated the case.
The suit alleges that the firm and vice president Patricia Tomaskovic violated the Employee Retirement Income Security Act (ERISA) by retaining approximately $99,000 in employee contributions and participant loan repayments in the general assets of Tomko Machine Works rather than remitting the assets to the plan over the period November 1, 1995 to August 31, 2000. The suit also alleges that the defendants retained $21,882 in voluntary employee contributions and loan payments in the company’s general assets during the same period, thereby failing to deposit them in the plan account in a timely manner. The defendants are also charged with failing to create written plan documents, to obtain the fidelity bond required by ERISA, and to collect two outstanding loans owed to the plan by a participant.
As relief, the suit seeks a court order to require that the defendants reimburse the plan for all losses with interest, to offset the plan account of Tomaskovic to restore plan assets and re-distribute the money to the remaining plan participants, collect the outstanding participant loans, and to appoint an independent fiduciary to terminate the plan and distribute its assets to the participants.
The company ceased operations in August 2001 and was involuntarily dissolved by the State of Illinois on April 1, 2002. The plan covered seven participants and had assets of $247,794 as of October 31, 2000.
The department's Voluntary Fiduciary Correction Program (VFCP) allows plans to correct failures in forwarding contributions withheld from employees’ paychecks and certain other ERISA violations. Eligible applicants that properly correct transactions under the program will not be subject to the enforcement action described above or liable for civil penalties. Excise tax liability under section 4975 of the Internal Revenue Code is also eliminated for certain transactions corrected through the VFCP.
This suit was filed in federal district court in Chicago, Illinois. Employers and workers can contact the regional office at 312.353.0900 or PWBA’s Toll-Free Employee & Employer Hotline number, 1.866.275.7922, for help with any problems relating to private-sector pension and health plans.
(Chao v. Tomko Machine Works, Inc.
Civil Action No. 02 C 3814)
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Archived News Release — Caution: Information may be out of date.