U.S. Labor Department Sues Officers of Elk Grove Village, Illinois, Company to Restore Employee Contributions to 401(k) Plan

Archived News Release — Caution: Information may be out of date.

Chicago, Illinois - The U.S. Department of Labor has sued the officers of Systems Transport Inc., Elk Grove Village, Illinois, to restore losses suffered by the company’s 401(k) plan when they allegedly failed to remit employee contributions, used plan assets for general company expenses, and failed to administer the plan.

“This action demonstrates the department’s commitment to protect the retirement benefits of America’s workers,” said Kenneth Bazar, director of the department’s Chicago regional office of the Employee Benefits Security Administration (EBSA), which investigated the case.

The lawsuit, filed in federal district court in Chicago, alleges that Systems Support Inc. President Michael Malone and Vice President Dale Johnston violated the Employee Retirement Income Security Act (ERISA). From July 27, 2000, to May 2, 2004, they allegedly failed to remit and forward in a timely fashion contributions withheld from employees’ paychecks and employee loan repayments to the plan. Prior to remitting the employee contributions and loan repayments, the money was retained with corporate assets and used to pay its general expenses. During the period January 1, 2003, through May 2, 2004, the defendants caused the company to retain the employee contributions and loan repayments. It also failed to ensure timely deposit of the money in the plan’s account. In addition, Johnston and Malone did not properly terminate the plan in order to distribute the assets to all eligible participants.

The department is seeking a court order permanently enjoining Johnston and Malone from serving as fiduciaries or service providers to any ERISA-covered employee benefit plan. The suit also asks the court to order Johnston to restore any losses to the plan, including interest, resulting from fiduciary breaches and to correct the prohibited transactions. The department seeks to remove Malone as trustee of the plan and seeks the appointment of an independent fiduciary to terminate the plan, as well as distribute its assets to participants and beneficiaries.

Systems Transport Inc. was formerly located at 2551 Allan Drive, Elk Grove Village. The primary business of the company was truck freight delivery, warehousing and storage. The company’s assets were liquidated after April 2, 2004.

The suit resulted from an investigation conducted by the Chicago regional office of EBSA. Employers and workers can reach the Chicago office at 312.353.6976 or through EBSA’s 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 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. Dale Johnston, Michael Malone, Systems Transport Inc. 401 (k) Profit Sharing Plan)
Civil Action No. 06CV1864

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

Contact Name: Juan Solano
Phone Number: 312.353.6976