Trustees of Stockton, Calif., Employee Stock Ownership Plan to Restore More Than $1.2 Million to Plan

Archived News Release — Caution: Information may be out of date.

San Francisco - The U. S. Department of Labor (DOL) has obtained a settlement agreement requiring the trustees of the Western Spray Painting Inc. employee stock ownership plan (ESOP), located in Stockton, Calif., to pay approximately $1.2 million in restitution to the plan and $236,667 in civil monetary penalties to the federal government.

The settlement resolves a lawsuit against trustees Mark S. Singleton, Jill Singleton and Carolyn B. Bennett for alleged violations of the Employee Retirement Income Security Act (ERISA) in connection with improper stock purchases with assets of the plan. In addition to the restitution, the trustees are permanently barred from serving in a future fiduciary capacity for any plans governed by the ERISA. The defendants also waive their right to receive benefits from the ESOP.

"This administration has a strong track record in protecting the benefits promised to America's workers," said U.S. Labor Secretary Elaine L. Chao. "This agreement restores more than $1.2 million to be distributed to workers and retirees."

The DOL lawsuit, filed Dec. 23, 2002, in Federal District Court for the Eastern District of California, alleged that the Singletons and Bennett improperly used plan assets to purchase company stock at prices in excess of the stock's actual value. They also allegedly used ESOP assets rather than corporate money to purchase stock and repay a stock acquisition debt of the employer.

Western Spray Painting Inc. produced liquid and powder coating for metal and plastic parts. Before the improper stock purchase, the plan had assets of exactly $1,157,441 in cash, cash equivalents and employer stock. Today, the plan has only $180,519 in cash, in addition to the now-worthless stock. Currently, there are 236 participants in the plan.

In fiscal year 2005, the DOL's Employee Benefits Security Administration (EBSA) achieved monetary results of $1.7 billion related to the pension, 401(k), health and other benefits for millions of American workers and their families. This case was investigated by EBSA's San Francisco regional office. Employers and workers can reach the regional office at 415-975-4600 or through EBSA's toll-free number of 1-866-444-EBSA (3272) for help with problems relating to private-sector retirement and health plans.

(U. S. v. Singleton)
Civil Action No. S-02-2722

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

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