U.S. Labor Department Sues Defunct California Corporation and its President for Failure to Remit Employee Contributions

Archived News Release — Caution: Information may be out of date.

San Francisco - The U.S. Department of Labor has sued UltraCard Inc. of Los Gatos, California, and its president for failure to remit employee contributions and loan repayments to the company’s 401(k) plan in a timely manner.

“The Labor Department is committed to protecting the benefits of America’s workers and retirees,” said Francis C. Clisham, regional director in San Francisco for the Labor Department’s Employee Benefits Security Administration (EBSA), which investigated the case. “We will not hesitate to act to hold accountable those who misuse workers’ retirement assets.”

The suit alleges that the company and its president, Daniel Kehoe, violated the Employee Retirement Income Security Act (ERISA) by failing to remit $27,193 in employee contributions to the plan from April 15, 2002 through July 15, 2002. The defendants also failed to terminate the plan and distribute its assets to eligible participants. The suit seeks to appoint a successor to manage the plan, which has been without oversight since the company ceased doing business.

The suit was filed in federal district court in San Francisco. At the time of the improper transactions, UltraCard was the plan administrator. The company was in the business of developing data storage using “Smart Card” technology. When UltraCard ceased operations in June 2002, the plan covered 33 participants.

The suit seeks to require the defendants to restore all contributions and lost earnings to the plan. It also seeks to remove Daniel Kehoe as a fiduciary, permanently bar him from serving as a fiduciary or service provider to any employee benefit plan covered by ERISA and appoint an independent fiduciary to terminate the plan and distribute the assets to eligible participants and beneficiaries.

The department’s suit resulted from an investigation conducted by EBSA’s San Francisco regional office. In 2005, EBSA achieved record 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 can reach the regional office at 415.975.4590 or through its toll-free number, 1.866.444.EBSA (3272), for help with problems relating to private-sector retirement and health plans.

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 correct any violations 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.

(Chao v. UltraCard, Inc.)
Civil Action No. C 06-7822 RMW (PVT).

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

Contact Name: Roger Gayman/Deanne Amaden
Phone Number: 415.975.4742/415.975.4741