U.S. Labor Department Sues to Recover More Than $37,000 for Jackson, Mississippi, Company’s 401(k) Plan

Archived News Release — Caution: Information may be out of date.

Atlanta, Georgia - The U.S. Department of Labor has filed suit to restore $37,053 to the 401(k) plan of now-bankrupt Lextron Corporation, Jackson, Mississippi.

“Trustees of a 401(k) plan have a responsibility to ensure that the assets of the plan are used solely to benefit participants,” said Howard Marsh, director of the department’s Atlanta regional office of the Employee Benefits Security Administration (EBSA).

The department’s suit alleges that Lextron and its 401(k) plan fiduciary, Charles Doty, violated the Employee Retirement Income Security Act (ERISA) between April 2002 and August 2003. The suit charges that the defendants failed to segregate employee plan contributions from company assets and to forward contributions to the plan in a timely manner.

Filed in U.S. District Court in Jackson, Mississippi, the suit seeks an order requiring the defendants to restore to the plan all losses, along with interest and lost earnings. The suit also asks the court to permanently bar Doty from serving as a fiduciary for any plan covered by ERISA.

Lextron Corporation, a manufacturer and distributor of wire harness assemblies, filed for bankruptcy in February 2004. The company-sponsored 401(k) plan had 86 participants and assets totaling $87,386 as of December 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 program requires employers to correct all violations 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 suit followed an investigation by EBSA’s Atlanta regional office. Employers and workers can contact the regional office at 404.562.2156 or EBSA’s toll-free number, 1.866.444.EBSA (3272), for help with problems relating to private-sector pension and health plans. In fiscal year 2005, EBSA achieved 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. The Lextron Corporation and Charles Doty)
Civil Action No. 3:06-cv-00148-WHB-JCS

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Archived News Release — Caution: Information may be out of date.

Contact Name: Dan Fuqua/Jo Anne Burgoyne
Phone Number: 404.562.2078/404.562.2076