Labor Department Sues Minnesota Printing Company to Recover Employee Contributions for 401(K) Plan

Archived News Release — Caution: Information may be out of date.

Chicago, Illinois - The U. S. Department of Labor sued Advanced Duplicating & Printing, Inc. in Minneapolis, Minnesota, and its owner on July 17, 2002 for failing to remit $50,098.69 in employee contributions and loan payments to the 401(k) plan during his tenure as a trustee.

“Plan officials have a duty to properly manage both plans and their assets in a way that benefits employees,” said Kansas City Regional Director Gregory Egan. “Our action today is designed to restore to the plan assets that were improperly used to benefit the employer.”

The Labor Department lawsuit, filed in federal district court in Minneapolis, Minnesota, alleges that Charles Rolfes violated the Employee Retirement Income Security Act (ERISA) by failing to remit employee contributions and loan payments to the plan over the period January 2000 to October 2001 and commingling the plan’s assets with those of the company. Rolfes also allegedly failed to obtain a fidelity bond as required by law.

The department’s suit seeks to require that Rolfes restore the plan’s assets with interest, forfeit his plan account to restore the plan’s losses, undo the prohibited transactions, and obtain a fidelity bond in an appropriate amount for the plan assets held in trust. The suit also asks the court to permanently bar Rolfes from serving as a fiduciary to any ERISA-covered plan in the future and to appoint an independent fiduciary to manage the Advanced Duplicating 401(k) Plan.

Advanced Duplicating & Printing filed for Chapter 11 bankruptcy on January 12, 2001 and ceased business operations in June of that year. The plan covered as many as 44 participants and had $1,088,534 in assets as of December 31, 1999.

The suit resulted from an investigation conducted by the Kansas City Regional Office of the department’s Pension and Welfare Benefits Administration (PWBA).

Egan noted that employers with similar problems, who are not yet the subject of an investigation by PWBA, may be eligible to participate in the Department's Voluntary Fiduciary Correction Program (VFCP). Participation in the VFCP requires employers to make workers whole but allows them to avoid PWBA enforcement actions and civil penalties as well as any applicable excise taxes.
"The VFCP gives plan sponsors a way to come into compliance with ERISA by restoring workers' benefits while avoiding an investigation by PWBA, said Egan. It protects workers' health and retirement benefits and allows us to focus our resources on those who seek to avoid compliance."

Employers and workers can reach the Kansas City Regional Office at 816.426.5131 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. Rolfes
Civil Action No. 02-1770 PAM/RLE)

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