Labor Department Sues Plan Officials for Mismanaging Georgia Benefits Plan

Archived News Release — Caution: Information may be out of date.

Atlanta, Georgia - The U.S. Department of Labor has sued the fiduciaries of Rehab Consultants Inc. (RCI), Jefferson, Georgia, for making improper loan payments from the company’s employee stock ownership plan (ESOP) to parent company Rehab Consultants of Florida (RCF) and then abandoning the plan.

“Plan officials have a duty to protect employees’ benefit plans and their assets,” said Ann L. Combs, assistant secretary of labor for employee benefits security. “Our action is designed to restore plan assets that were not properly preserved for the company’s workers.”

According to the lawsuit, filed in federal district court in Atlanta, Georgia, plan committee members -- Joseph Gentzel, Mary Ann Gentzel, Grayson Gentzel, Jennifer Heidt Gentzel, and Graeme Gentzel -- violated the Employee Retirement Income Security Act (ERISA) by allowing the plan to engage in a prohibited transaction. Loan payments of more than $170,000 were paid from the plan to RCF. In June 2001, RCI was dissolved and the plan committee members resigned without providing for continued management of the plan.

The value of the stock purchased by the ESOP, which the Labor Department alleges the defendants abandoned, declined from $19.74 per share in 1996 to $.79 per share in 1998 and is currently worthless.

The suit seeks a court order requiring the defendants to restore to the plan all losses with interest. The suit also asks the court to permanently bar the defendants from serving in a fiduciary capacity to any plan governed by ERISA and to appoint an independent fiduciary to manage, terminate and distribute plan assets to eligible participants.

The suit resulted from an investigation conducted by EBSA’s Atlanta regional office. In fiscal year 2005, the department achieved monetary results of $1.7 billion in pension, 401(k), health and other benefits for millions of American workers and their families. Employers and workers can contact the Atlanta office at 404.562.2156 or toll-free at 1.866.444.EBSA (3272) for help with problems relating to private-sector pension and health plans.

(Chao v. Gentzel)
Civil Action No. 06-CV-0448

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Archived News Release — Caution: Information may be out of date.

Contact Name: David James/Gloria Della
Phone Number: 202.693.4676/202.693.8664