Labor Department Sues Owner of Columbus Firm To Protect Employee Contributions to SIMPLE IRA Plan

Archived News Release — Caution: Information may be out of date.

Columbus, Ohio - The U.S. Department of Labor has filed a lawsuit in federal district court against Clifford D. Simms, president and owner of Advanced Gear Technology, Columbus, Ohio, seeking to recover funds he owes to the company’s SIMPLE IRA plan.

The suit, filed in the U.S. District Court in Columbus, alleges that Simms violated his fiduciary duties under the Employee Retirement Income Security Act (ERISA) by allowing employee contributions owed to the plan to be used for the benefit of Advanced Gear Technology. The department’s suit alleges that from August 2001 through April 2002, Simms failed to forward voluntary employee contributions to the plan in a timely manner. He also failed to segregate employees’ contributions from the company’s general assets.

“The department will act when plan fiduciaries fail to carry out their duty to protect the retirement plan assets held on behalf of participants,” said Joseph Menez, director of the department’s Cincinnati regional office of the Employee Benefits Security Administration (EBSA).

The suit asks the court to order Simms to remit elective employee salary deferrals for contributions to the plan and to make good on any losses the plan may have incurred as a result of his fiduciary breaches. It further asks that Simms be permanently barred from serving as a fiduciary or service provider to any ERISA-covered employee benefit plan.

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 VFCP requires employers to correct any violations, but allows them to avoid EBSA enforcement actions and civil penalties as well as applicable excise taxes. For more information about the VFCP, see www.dol.gov/ebsa.

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. Employers and workers can reach EBSA’s Cincinnati regional office at 859.578.4680 or through EBSA’s toll-free number, 1.866.444.EBSA (3272), for help with problems relating to private-sector retirement and health plans.

(Chao v. Clifford D. Simms)
Civil Action No. CV00294

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Archived News Release — Caution: Information may be out of date.

Contact Name: Brad Mitchell
Phone Number: 312.353.6976