Labor Department Sues Phoenix Car Repair Business over 401(k) Plan

Archived News Release — Caution: Information may be out of date.

San Francisco, California - The U.S. Department of Labor has sued a Phoenix car repair business and its owner for failing to deposit employee contributions into the company’s 401(k) plan.

Filed in U.S. District Court for the District of Arizona, the suit alleges that Independent Import Services president Lee Morris violated the Employee Retirement Income Security Act (ERISA) by failing to remit employee contributions to the 401(k) plan and loan repayments by participants that included $8,400 he personally borrowed.

“The Labor Department is committed to protecting the benefits of America’s workers and retirees,” said Billy Beaver, regional director in Los Angeles for the Labor Department’s Employee Benefits Security Administration (EBSA). “We will not hesitate to act to hold accountable those who misuse workers’ retirement assets.”

The suit seeks to recover $31,923 in unpaid contributions plus lost earnings. The suit also seeks to remove Morris as a plan fiduciary and permanently bar him from serving as a fiduciary. It also seeks appointment of an independent fiduciary, at Morris’ expense, to terminate the plan and distribute assets to eligible participants. Morris’ own plan assets would be used to help cover plan losses, if necessary.

The violations occurred between December 2001 and November 2003, when the firm stopped deducting contributions from employees’ paychecks. The 401(k) plan served 16 participants and had more than $120,700 in assets as of December 31, 2003. The case was investigated by the EBSA regional office in Los Angeles.

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 with questions or concerns regarding their private-sector pension and health plans can contact the EBSA regional office in Los Angeles at 626.229.1000 or EBSA’s toll-free number, 1.866.444.EBSA (3272). Information is also available from the agency’s Web site at www.dol.gov/ebsa.

(Chao v. Morris, et al.)
Civil Action No. CV06-1581-PHX-DGC

U.S. Department of Labor news releases are accessible on the Department's Newsroom page. The information in this news release will be made available in alternate format upon request (large print, Braille, audio tape or disc) from the COAST office. Please specify which news release when placing your request at 202.693.7765 or TTY 202.693.7755. The U.S. Department of Labor is committed to providing America's employers and employees with easy access to understandable information on how to comply with its laws and regulations. For more information, please visit the Department's Compliance Assistance page.

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

Contact Name: Deanne Amaden
Phone Number: 415.975.4741