U.S. Labor Department Obtains Judgment Ordering Payment of More Than $1.3 Million to Long Island, New York, 401(k) Plan

Archived News Release — Caution: Information may be out of date.

New York, New York - The U.S. Department of Labor has obtained a consent judgment ordering payment of over $1.3 million to a 401(k) plan sponsored by Lawrence Aviation Industries Inc. of Port Jefferson Station, New York. The judgment resolves a lawsuit against the company, a manufacturer of titanium products for the aerospace industry, and its owner.

“This employer treated their employees' 401(k) plan as their personal piggy bank," said Secretary of Labor Elaine L. Chao. "I am pleased that the department was able to obtain a court order on behalf of the employees to restore the $1.3 million that was taken from their 401(k) plan.”

The suit, filed May 2004, against the Long Island company and owner Gerald Cohen, alleged violations of the federal Employee Retirement Income Security Act. The suit charged that the defendants made loans to themselves from plan assets which they never repaid, and that they failed to collect employee contributions owed to the plan.

The consent judgment was entered in U.S. District Court for the Eastern District of New York. The judgment permanently bars the defendants from serving as plan fiduciaries and orders them to repay $1,385,911.07 to the plan. Cohen also is required to waive his right to receive any benefits from the plan, and the court will appoint an independent fiduciary to administer the plan, collect the restitution and terminate the plan, if necessary.

Employers with similar problems, who are not yet the subject of an investigation by the Labor Department’s Employee Benefits Security Administration (EBSA), may be eligible to participate in the department's Voluntary Fiduciary Correction Program (VFCP). Participation in the VFCP requires employers to correct any 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 resulted from an investigation by EBSA’s New York regional office. Employers and workers can reach EBSA at 212.607.8600 or through its toll-free number, 1.866.444.EBSA (3272), for help with problems relating to private-sector retirement and health plans. 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. Cohen)
Civil Action Number 2:04-CV-1921-ADS-WDW

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Archived News Release — Caution: Information may be out of date.

Contact Name: John M. Chavez
Phone Number: 617.565.2075