U.S. Department of Labor Sues to Protect Employees’ 401(k) Funds

Archived News Release — Caution: Information may be out of date.

San Francisco, California - The U.S. Department of Labor has sued three former officials of a Livermore, California business for failing to properly forward employee contributions to the company’s 401(k) plan. The plan covered approximately 95 participants when the telecommunications and networking company ceased operations in October 2004 at the Livermore and Pleasanton locations.

The suit alleges Robert Chipley, Curtis Chipley, and Wilbert Chang, all former officers or directors of Prime Services Group, violated the Employee Retirement Income Security Act. The defendants allegedly co-mingled employee contributions with the company’s general assets between February 2001 and August 2003. Filed in U.S District Court in San Francisco, the suit seeks to restore at least $23,312 in employee contributions and any lost interest on late contributions to the plan. The company filed for bankruptcy protection in March 2005.

“The department is committed to protecting the benefits of America’s workers and retirees,” said Francis C. Clisham, regional director of the department’s Employee Benefits Security Administration (EBSA) in San Francisco, which investigated the case. “This is money that was deducted from employees’ paychecks and belongs to those workers, and our legal action is designed to restore those assets that Prime Services failed to forward to the 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 program requires employers to make workers whole 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.

Employers and workers with questions or concerns regarding their private-sector pension and health plans can contact the EBSA regional office in San Francisco at 415.975.4600 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.

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. Chipley)
Civil Action No. CV 06- C064888 EMC

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