U.S. Labor Department Sues Rhode Island Employer to Restore Funds to 401(k) Plan

Archived News Release — Caution: Information may be out of date.

Boston, Massachusetts - The U.S. Department of Labor has sued the president of now-defunct e-tel Corp., West Warwick, Rhode Island, seeking restoration of funds to the company’s 401(k) plan.

According to James Benages, Boston regional director for the department’s Employee Benefits Security Administration (EBSA), the suit was filed in the U.S. District Court for the District of Rhode Island against Matthias E. Lukens whose company ceased operations January, 2003, and was placed in receivership by the State Court of Rhode Island. The company’s 401(k) profit sharing plan was established January 1, 2000.

The Labor Department’s lawsuit alleges that from March 16, 2001, to the present e-tel Corp. withheld employee contributions but failed to forward them to the 401(k) plan, a violation of the Employee Retirement Income Security Act (ERISA), the federal law that protects private employee pension and benefit plans.

Said Benages: “Our legal action in this case should put employers and plan sponsors on notice that we will not hesitate to resort to litigation to enforce the law and make sure that plan participants receive the benefits to which they are entitled.”

The department’s suit asks the court to prohibit the defendant from future violations of ERISA and permanently bar him from serving as a fiduciary to any employee benefit plan covered by the retirement law. The suit also asks the court to order Lukens to undo his prohibited transactions and restore to the plan all losses including interest -- a total of $38,147.25 -- resulting from his breaches of fiduciary duty. The ultimate goal of the suit is to distribute to each participant his or her proper share of the plan’s assets, after which the plan will be terminated.

The Labor Department’s legal action resulted from an investigation conducted by EBSA’s Boston regional office. In fiscal year 2005, EBSA achieved record monetary results of $1.7 billion related to the pension, 401(k), health and other benefits of millions of American workers and their families. Employers and workers can contact the Boston regional office at 617.565.9600 or EBSA’s toll-free number, 1.866.444.EBSA (3272), for more information on the requirements of ERISA or for help with problems relating to private-sector pension and health plans. Additional information can be found at www.dol.gov/ebsa.

(Chao v Matthias E. Lukens)
Civil Action Number: 06-93 ML

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

Contact Name: John M. Chavez
Phone Number: 617.565.2075