Labor Department Sues Wisconsin Radio Broadcasters For Misusing Workers’ Pension Contributions

Archived News Release — Caution: Information may be out of date.

Milwaukee, Wisconsin - The U.S. Department of Labor has charged Radio Plus, Inc. of Fond du Lac, Wisconsin, and its owners with misusing funds intended for its employees’ 401 (k) plan, including employees who worked for BBK Broadcasting, Inc., before it became Radio Plus.

The department filed a lawsuit in federal district court in Milwaukee in late November against the company and two trustees of the BBK Broadcasting, Inc. 401(k) Plan, Chris Bernier and Terry Holzmann. All are accused of violating their duties under the Employee Retirement Income Security Act (ERISA).

“Trustees of a 401(k) plan have certain responsibilities to ensure that the assets of the plan are used solely to benefit participants. One of the most important is putting money from workers’ wages into their 401(k) accounts on time,” said Kenneth Bazar, regional director in Chicago for the Labor Department’s Pension and Welfare Benefits Administration (PWBA), which investigated this case.

The defendants allegedly failed to timely separate and remit employee contributions to the investment accounts of workers, retained plan assets with those of the company, did not obtain a fidelity bond as required by law and failed to collect lost opportunity costs owed on the contributions. The plan, which covered as many as 23 participants, had assets of $164,765 as of December 29, 2000.

The department is seeking a court order requiring the defendants to reimburse the plan for all losses with interest, to offset any plan accounts of the trustees, to obtain a fidelity bond, and to cancel any prohibited transactions with the plan, including return of an illegal profits received by the defendants.

The lawsuit also asks that the trustees be permanently barred from serving as fiduciaries of any plan governed by ERISA and to require the appointment of an independent fiduciary to manage the plan.

Bazar noted that employers with similar problems who are not yet the subject of an investigation by PWBA may be eligible to participate in the 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.

Employers and workers can reach the Chicago regional office through PWBA’s Toll-Free Employee & Employer Hotline number, 1.866.275.7922, for help with problems relating to private-sector pension and health plans. For more information about the VFCP see www.dol.gov/pwba.

(Chao v. Radio Plus, Inc.)

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