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News Release
Labor Department Sues Former Company Officers for Losses to Employee Pension Plan
Archived News Release — Caution: Information may be out of date.
San Francisco, California - The U.S. Department of Labor has filed a lawsuit against the administrators of a now-defunct employee stock ownership plan to recover retirement funds for some 236 plan participants.
The complaint charges that fiduciaries of the employee stock ownership plan for Western Spray Painting, Inc., formerly based in Stockton, California, breached their duties in 1996 and 1997 when they allowed the plan to purchase company stock for more than its value. The 1996 purchase was part of a transaction to buy out company founders and plan fiduciaries Carolyn Bennett, of Stockton, California, and her late husband.
Named in the complaint are Carolyn Bennett and fellow plan fiduciaries Mark and Jill Singleton, of Mesa, Arizona; and Jennifer Downer, a California resident who allowed use of plan assets to purchase over-valued company stock.
Mark Singleton, who took over as president of Western Spray Painting upon the departure of the Bennetts, allowed plan assets to be used for additional purchases of Western Spray Painting stock in 1997 without obtaining a reliable valuation of the stock.
“Those who hold positions of trust for employee benefit plans must act in the best interest of the plan and those who it is supposed to help,” said Bette Briggs, regional director in San Francisco for the U.S. Department of Labor’s Pension and Welfare Benefit Administration (PWBA). “The Bennetts and Mark Singleton failed to protect funds intended for their employees’ retirement.”
The WSP employee stock ownership plan was established in 1987. Employees affected by the loss worked in Stockton and Santa Clara, in Arizona, in Utah and in Colorado. In 1999 when the company was sold, 236 employees and former employees were invested in the plan.
The Labor Department suit seeks to have an independent fiduciary appointed to administer the plan and distribute its assets to the beneficiaries. It also seeks to have Bennett, the Singletons, Downer and Western Spray Paint restore the losses to the plan they caused, including lost opportunity income, and to require them to forfeit any interests in the plan. They may also be permanently barred from serving in positions of trust for other benefits plans covered by the Employee Retirement Income Security Act.
The suit was filed December 23 in U.S. District Court for the Eastern District of California following an investigation by the San Francisco regional office of the PWBA.
(Chao vs. Mark S. Singleton, et al.
Case No. CIV 2-02-2722 LKK/GGH)
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Archived News Release — Caution: Information may be out of date.