Labor Department Judgment Requires Plan Official To Purchase Stock from Pension Plan

Archived News Release — Caution: Information may be out of date.

Cincinnati, Ohio - The U.S. Department of Labor obtained a consent judgment August 1, 2002, ordering the sole trustee of the Prime Care Services, Inc. money purchase pension plan of Bingham Falls, Michigan to buy back 43.5 shares of Su-Pra Enterprise, Inc. stock currently held by the plan for the purchase price of $504,699.96, including interest the plan would have earned.

“By today’s action, the department is reaffirming its commitment to protect the hard-earned benefits of American workers," said Joseph Menez, director of the department’s Cincinnati Regional Office of the Pension and Welfare Benefits Administration, which investigated the case.

Elena Szilvagyi, sole trustee of the plan, was sued by the department along with Prime Care Services, Inc. and Su-Pra Enterprises, Inc. for a $500,000 stock purchase agreement on January 19, 1999, with Su-Pra Enterprises, a participating employer in the plan. The department alleged that the stock purchase was a prohibited transaction under the Employee Retirement Income Security Act (ERISA) because the stock did not constitute qualifying employer securities. At the time of the purchase, Szilvagyi was president and chief executive officer of both companies.

According to the consent judgment, the stock will be released to Szilvagyi as she repays the plan according to an installment arrangement established by the court in the Eastern District of Michigan, Southern District, in Detroit.

The plan was established in 1991 by Prime Care to provide benefits to its employees upon retirement, death or disability. The plan had 335 participants and assets totaling $5,044,468 as of April 30, 1999. Prior to the January 1999 purchase, all shares of Su-Pra Enterprises stock were held in a revocable trust with Szilvagyi and her husband as trustees and beneficiaries being Szilvagyi’s husband, parents and children. Prime Care provides home health care services and Su-Pra is its parent company and essentially provides management services.

Employers and workers can contact the regional office at 1.859.578.4680 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. Prime Care Services, Inc.
Civil Action No. 02-73151)

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Archived News Release — Caution: Information may be out of date.