Labor Department Sues Spain Electric to Recover Employee Contributions to Pension and Health Plans

Archived News Release — Caution: Information may be out of date.

Kansas City, Missouri - The U.S. Department of Labor has sued Daniel P. Spain, president of the now bankrupt West Des Moines-based Spain Electric, Inc, and fiduciary of the company’s pension and health plans. The suit, filed January 16, 2003, seeks to recover losses of $34,642 in contributions withheld from employees’ wages that were not forwarded to the plans.

Spain allegedly caused the pension plan to lose $31,039 by failing to segregate employees’ 401(k) plan withholdings from monies in the company’s general operating fund from March 7 to June 20, 2001. In addition, from October 1, 2001 to February 2002, $3,602 withheld from paychecks as health plan deductions was not forwarded to pay insurance premiums, causing the insurance company to cancel coverage.

“This action underscores the Department of Labor’s commitment to protect and secure the benefits promised to employees by their employers,” said Gregory Egan, Director of the department’s Kansas City Regional Office of the Pension and Welfare Benefits Administration (PWBA), which investigated the case.

The company pension plan had 52 participants and assets totaling $384,355.07 as of December 31, 2001. Employees of Ganoe Electric, which Spain and his wife bought in 1997, also are covered by the plans.

The department is seeking to require Spain to restore all contributions plus lost earnings to the plan and to bar him from serving as an official to any plan governed by the Employee Retirement Income Security Act (ERISA). The department also asked the court to appoint an independent trustee to take over the plans and redistribute amounts set off from the Spain’s 401(k) account to other participants of the pension plan.

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 who have questions or concerns regarding their private-sector pension and health plans can contact the PWBA regional office for help at 816.426.5131 or PWBA’s Toll-Free Employee & Employer Hotline number, 1.866.275.7922.

(Chao v. Daniel P. Spain
Civil Action No. 4:03-CV-90021)

U.S. Department of Labor news releases are accessible on the Internet. The information in this news release will be made available in alternate format upon request (large print, Braille, audio tape or disc) from the Central Office for Assistive Services and Technology. Please specify which news release when placing your request. Call 202.693.7773 or TTY 202.693.7755.

Printer Friendly Version

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