Labor Department Restores Nearly $70,000 to Chatsworth Machining Firm’s 401(k) and Health Plans

Archived News Release — Caution: Information may be out of date.

San Francisco, California - A U.S. District Court in Los Angeles ordered two former owners of Chatsworth, California-based, Simon Brothers Precision Machining to restore nearly $70,000 in delinquent employee contributions and loan repayments to the company’s 401(k) and health plans. The action resolves a lawsuit filed by the U.S. Labor Department last June to restore assets for 50 former employees of the company.

The owners of Simon Brothers, Mordehai Simon of Calabasas, California, and Marius Simon of Agua Dulce, also are permanently barred from serving as fiduciaries to employee benefit plans governed by the Employee Retirement Income Security Act. In addition, the court order appoints an independent fiduciary to collect money owed to the plans and make distributions to eligible plan participants.

Investigators found the Simons had failed to forward employee contributions and employee loan repayments to the company’s plans. They also withdrew plan funds and used the money to pay corporate debts and expenses after the company experienced financial problems.

“Those responsible for employee benefit plans cannot misuse their employees’ funds, and the Labor Department will pursue every avenue to have employee contributions restored to their plans,” said Billy Beaver, regional director of the Labor Department’s Employee Benefits Security Administration (EBSA) in Los Angeles, which investigated the case.

Simon Brothers Precision Machining provided machining and manufacturing parts primarily for the aerospace industry until early 2004 when it went out of business.

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 program requires employers to reimburse plans and participants 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.

Employers and workers with questions or concerns regarding their private-sector pension and health plans can contact the EBSA regional office in Los Angeles at 626.229.1000 or EBSA’s toll free number, 1.866.444.EBSA (3272). Information is also available from the agency’s Web site at www.dol.gov/ebsa. In fiscal year 2005, EBSA achieved record monetary results of $1.7 billion related to pension, 401(k), health and other benefits for millions of American workers and their families.

(Chao v. Simon Brothers Precision Machining, Inc.)
Civil Action No. CV05-4712 CBM - U.S. District Court for the Central District of California

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

Contact Name: Roger Gayman
Phone Number: 415.975.4742