U.S. Labor Department Sues Former Hebron, Kentucky Company and Owner to Recover 401(k) Plan Losses

Archived News Release — Caution: Information may be out of date.

Atlanta, Georgia - The U.S. Department of Labor has sued now-closed Mitchell Molding Company Inc., Hebron, Kentucky, and its bankrupt former owner to recover $5,870 in delinquent employee contributions to the company's 401(k) plan.

"This action demonstrates the department's commitment to protect the benefits of America's workers," said Joseph Menez, director of the department's Cincinnati regional office of the Employee Benefits Security Administration (EBSA).

The lawsuit alleges that Mitchell Molding and John P Chalfant of Ft. Mitchell, Kentucky, violated the Employee Retirement Income Security Act (ERISA) when they failed to timely remit employee contributions to the plan at various times between January 6 and June 29, 2000, and to remit any employee contributions made between July 6, 2000 and March 27, 2003. Additionally, the suit alleges that the defendants didn't segregate plan assets from those of other funds, ensure plan assets were received by the plan and obtain a fidelity bond as required by law.

The suit seeks to require that the company and Chalfant restore all losses, including interest or lost opportunity costs, to the plan. It also asks the court to permanently bar Chalfant from service to any plan governed by ERISA and to appoint an independent fiduciary to manage the plan, terminate it and distribute the assets.

Mitchell Molding was in the business of plastic injection molding. The 401(k) plan covered five participants and had assets of $8,455 as of March 31, 2004.

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 correct violations of the law 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.

The case resulted from an investigation conducted by the EBSA's Cincinnati regional office. Employers and workers can reach the Cincinnati office at 859.578.4680 or through EBSA's toll-free number, 1.866.444.EBSA (3272), for help with problems relating to private-sector retirement and health plans.

(Chao v. Mitchell Molding Company, Inc.)
Civil Action No. 05-235-DLB

U.S. Department of Labor news releases are accessible on the Department's Newsroom page. The information in this news release will be made available in alternate format upon request (large print, Braille, audio tape or disc) from the COAST office. Please specify which news release when placing your request at 202.693.7765 or TTY 202.693.7755. The U.S. Department of Labor is committed to providing America's employers and employees with easy access to understandable information on how to comply with its laws and regulations. For more information, please visit the Department's Compliance Assistance page.

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