Trustees and Owners Ordered to Restore 401(k) Plan Assets Under Judgment Obtained by Labor Department

Archived News Release — Caution: Information may be out of date.

Minneapolis, Minnesota - The fiduciaries of a 401(k) plan in Minneapolis have been ordered to restore $17,500 to a 401(k) plan as the result of a lawsuit filed by the U.S. Department of Labor to recover money that was withheld from employees’ paychecks but not deposited in their plan accounts. The trustees also were ordered to relinquish their right to employee contributions withheld from their paychecks amounting to an additional $2,900.

John M. Tuschner, Dennis B. Reiter, and Francis A. Dahlberg, were the trustees of the Tuschner 401(k) Plan. Other parties required to contribute to the amount repaid included Equity Capital Group, Inc. and Sammy Fleschler, trustee of the Hou-Tex Trust, who allegedly had been owners of Tuschner Financial Group, Inc. (TFGI), the plan sponsor. The trustees also were ordered to terminate the plan and distribute the additional contributions to participants and beneficiaries.

“This action underscores the Department of Labor’s commitment to preserve and secure the benefits promised to employees by their employers,” said Gregory Egan, director of the department’s Kansas City regional office of the Employee Benefits Security Administration (EBSA), which investigated the case.

The judgment resulted from a lawsuit filed by the department in January 2002 in federal district court in Minneapolis. The lawsuit alleged that the defendants in the case violated the Employee Retirement Income Security Act by failing to remit employee contributions withheld from their paychecks and designated for the 401(k) plan of TFGI for the period February through June 1999. TFGI was a securities brokerage firm that was incorporated in July 1993. Its 401(k) plan had 25 participants and assets of $213,400 as of December 31, 1998. The judgment was entered on March 6.

Employers with similar problems, who are not yet the subject of an investigation by EBSA, 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 EBSA enforcement actions and civil penalties as well as applicable excise taxes. For more information about the VFCP see www.dol.gov/ebsa.

Employers and workers can reach the Kansas City regional office at 816.426.5131 or EBSA’s toll free number, 1.866.444.3276, for help with problems relating to private-sector pension and health plans.

(Chao v. John M. Tuschner, et. al.
Civil Action No. 02-CV-114)

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