U.S. Department of Labor Obtains Judgment Against Shreveport Business and Owner To Restore 401(k) Employee Contributions

Archived News Release — Caution: Information may be out of date.

Shreveport, Louisiana - The U.S. Department of Labor has obtained a consent judgment and order requiring Carl Pons Electric Motor Service Inc. in Shreveport, Louisiana, and its owner to repay losses suffered by the company’s 401(k) plan for failing to timely remit and forward retirement contributions deducted from employees’ paychecks.

A lawsuit, filed in Shreveport’s federal district court, alleges that Carl Pons and Allan M. Grayson III failed to forward employee 401(k) contributions totaling about $3,900 in December 2000, in violation of the Employee Retirement Income Security Act (ERISA). Allan M. Grayson, III is part owner, company president and a plan fiduciary.

The judgment filed simultaneous with the lawsuit requires Carl Pons and Grayson to restore all losses to the plan with interest, prescribes the manner by which the defendants will restore such losses to the participants, and permanently prohibits Grayson from serving as a fiduciary to any employee benefit plan governed by ERISA. Total plan losses, including lost opportunity costs, are approximately $4,620.

Carl Pons is an electrical apparatus service and repair company that also sells electrical motors and performs crane repairs. It operates in Louisiana and Texas.

“This action demonstrates our commitment to protect the hard-earned benefits of American workers,” said Roger Hilburn, acting director of the department’s Dallas regional office of the Employee Benefits Security Administration (EBSA), which investigated the case.

Employees 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 any applicable excise taxes. For more information about the VFCP, see www.dol.gov/ebsa.

In fiscal year 2003, EBSA achieved record monetary results of $1.4 billion related to the pension, 401(k), health and other benefits of millions of American workers and their families. Employers and workers can reach EBSA’s Dallas regional office at 214.767.6831 or through its toll-free number, 1.866.444.EBSA (3272), for help with problems related to private-sector retirement and health plans.

(Chao v. Grayson)
Civil Action No.

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Archived News Release — Caution: Information may be out of date.