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News Release
Labor Department Sues Marietta Industrial Enterprises to Recover Participant Contributions and Loan Payments to Pension Plan
Archived News Release — Caution: Information may be out of date.
Chicago, Illinois - The U.S. Department of Labor sued Marietta, Ohio-based Marietta Industrial Enterprises, Inc., and its 401(k) profit sharing plan trustees for failing to forward to the fund employee contributions withheld from paychecks. They allegedly commingled these withholdings with the company’s general assets.
They also allegedly failed to secure and maintain a fidelity bond for the plan as required by the federal pension law and improperly administered the fund’s participant loan program.
“This action underscores the department’s commitment to protect and preserve the benefits promised to employees by their employers,” said Joseph Menez, director of the department’s Pension and Welfare Benefits Administration’s Cincinnati Regional Office.
Cited in the department’s complaint of January 3, 2003 are David Downing, Burt M. Elliott, William Scott Elliott, R. Grant Elliott and Thomas L. Rose, plan trustees, whose failure to forward employee contributions occurred between January 3, 1997 and October 26, 2001. They also failed to forward participant loan payments after August 18, 2000. On November 1, 2001, the company filed for Chapter 11 bankruptcy in U.S. Bankruptcy Court of the Western District of Pennsylvania.
The company’s plan was established in September 1975 as a defined contribution plan. It allowed employees to make voluntary salary-reduction contributions through payroll withholdings. As of September 30, 2000, the company pension plan had 86 participants. Assets totaled $992,359.
In its lawsuit the department is seeking to require the defendants to restore all contributions plus lost earnings and to remove them from as trustees and bar from serving as officials to any plan governed by the Employee Retirement Income Security Act (ERISA). The department also asked the court to appoint an independent trustee who would operate the plan and redistribute amounts set off from the defendants’ 401(k) accounts to other participants.
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 contact the PWBA regional office at 859.578.4680 or PWBA’s Toll-Free Employee & Employer Hotline number, 1.866.275.7922, for help with problems relating to private-sector pension and health plans.
(Chao v. Marietta Industrial Enterprises, Inc.
Civil Action No. C2 03 017)
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Archived News Release — Caution: Information may be out of date.