Labor Department Obtains Judgment Barring Former Maryland Executive From Service to Employee Benefit Plans

Archived News Release — Caution: Information may be out of date.

Washington, DC - The former chief executive officer of bankrupt Bara-King Photographic, Inc. of Fort Washington, Maryland, has been barred from serving as a fiduciary for any work-based benefit plan that is covered by the federal pension law. The ruling against J. Robert King was made on November 14, 2002 in a consent judgment filed in federal district court in Baltimore. King was sued by the U.S. Department of Labor for allegedly violating the Employee Retirement Income Security Act (ERISA)

The department simultaneously filed a lawsuit against King, as trustee of the company’s savings plan for employees, for allegedly failing to remit contributions to the plan that were made by workers. King also allegedly commingled plan assets with those of the company, withdrew assets from the plan for the benefit of himself and Bara-King and used plan assets to pay the operating expenses of the company.

The company filed for Chapter 11 bankruptcy protection on February 2, 1998. The savings plan covered as many as 61 participants and had $145,276 in assets as of August 13, 2001.

“Our action ensures that retirement assets of workers such as the Bara-King employees are preserved when their employer declares bankruptcy. The law clearly states that these assets must be used to pay benefits promised to workers,” said Mabel Capolongo, regional director of the Philadelphia office of the department’s Pension and Welfare Benefits Administration.

The Washington, DC district office of the Pension and Welfare Benefits Administration investigated the case.
Capolongo 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.

For more information about the VFCP see www.dol.gov/pwba.

Employers and workers can reach the Philadelphia regional office through 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. King
Civil Action No. 8:02-CV-03597)

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Archived News Release — Caution: Information may be out of date.