Labor Department Sues Officer of Duluth, Minnesota Business For Failing to Administer Retirement Plan

Archived News Release — Caution: Information may be out of date.

Duluth, Minnesota - The U.S. Department of Labor has sued the president of Arrowhead Equipment Company, Duluth, Minnesota, for failing to administer and terminate the company’s employee stock ownership plan so that assets could be distributed to plan participants.

The suit names Gunnar Viljaste and the Arrowhead Equipment Company as fiduciaries of the Employee Stock Ownership Plan (ESOP). The company provided tires and parts for trucks, as well as an automotive service and rest stop. It ceased operating in June 2005.

“The department is committed to act quickly to help workers get their benefits when plan assets are misused or their plans are abandoned,” said Steven Eischen, regional director of the Kansas City office of the Employee Benefits Security Administration (EBSA), which investigated the case.

The suit alleges that Viljaste failed to terminate the plan and distribute assets to participants and beneficiaries after the company ceased operations. The defendants, as fiduciaries of the ESOP, allegedly failed to diversify investments of certain plan participants, to allocate stock to participants and to follow the plan document. The ESOP covers 43 participants, with total assets of $123,267.

The suit seeks to order Arrowhead Equipment Company and Viljaste to correct the transactions prohibited by law and to permanently bar them from serving in a fiduciary capacity to any employee benefit plan covered by ERISA. The department also asks the court to appoint an independent fiduciary to administer the plan and distribute the assets.

Employers and workers can reach EBSA’s Kansas City regional office at 816.426.5131. Help with problems relating to private-sector retirement and health plans can also be obtained by calling EBSA’s toll-free number, 1.866.444.EBSA (3272). 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. Arrowhead Equipment Company)
Civil Action No. CV-06-3813

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Archived News Release — Caution: Information may be out of date.

Contact Name: Brad Mitchell
Phone Number: 312.353.6976