Labor Department Settles Lawsuit with Colorado Springs-Based Johnson Plumbing Plan Official

Archived News Release — Caution: Information may be out of date.

Denver, Colorado - A settlement has been reached between the U.S. Department of Labor and defendant Richard Johnson, a fiduciary of the Colorado Springs, Colorado based Johnson Plumbing Company’s SIMPLE IRA plan. From May 2000 to December 2000, Johnson withheld $34,282 from the paychecks of employees, intended as contributions to the plan, but failed to forward appropriate amounts to their individual retirement accounts.

Richard Johnson, also the company’s president, was ordered to begin repaying the losses, plus interest, to the plan participants according to a payment schedule outlined in the court order. He also was permanently barred from further violations of the Employee Retirement Income Security Act (ERISA), which governs pension plans offered by private-sector employers.

There were 46 participants in the plan and assets of $160,794 in individual participant accounts as of December 31, 2000.

“The department’s goal is to protect the hard-earned benefits promised to employees,” said Gregory Egan, Regional Director of the Kansas City office of the Labor Department’s Pension and Welfare Benefits Administration (EBSA), which conducted the investigation.

The department’s complaint was filed September 10, 2002 and the consent judgment was entered on September 16, 2002 in the federal district court in Denver, Colorado.

Egan noted that employers with similar problems, who are not yet the subject of an investigation by EBSA, 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 EBSA enforcement actions and civil penalties as well as applicable excise taxes.

“The VFCP gives sponsors a way to come into compliance with ERISA by restoring workers’ benefits while avoiding an investigation by EBSA,” 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 contact the Kansas City office at 1.816.426.5131 or call EBSA’s Toll-Free Employee & Employer Hotline number at 1.866.275.7922 for help with problems relating to private-sector pension and health plans.

(Chao v. Richard Johnson
Civil Action No. 02-B-1745)

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Archived News Release — Caution: Information may be out of date.