U.S. Labor Department Sues Miami Company and President to Recover $1.5 Million in Retirement Plan Assets

Archived News Release — Caution: Information may be out of date.

Miami - The U.S. Department of Labor filed a lawsuit against Miami-based X-Ray Equipment Co. and its owner for misusing more than $1.5 million in retirement plan assets to benefit the company through improper loans from the profit sharing plan and retention of loan repayments paid by plan participants and third-party borrowers.

“Workers’ retirement plans are not to be treated as cash machines for management’s convenience,” said U.S. Secretary of Labor Elaine L. Chao. “This legal action on behalf of the retirement plan’s participants seeks to recover more than $1.5 million, ensure the plan’s future integrity and prevent the defendants from ever again being in a position to plunder employee benefits.”

The lawsuit alleges that X-Ray Equipment and its president, Colen Carter, violated the Employee Retirement Income Security Act (ERISA) between September 30, 2000 and the present by failing to collect $1,156,800 in loans plus interest owed to the plan and by failing to forward to the plan $427,021 in loan payments made by participants and third-party borrowers. The loan repayments were co-mingled with the general assets of the company and used to pay company expenses.

The company and Carter, who was the plan trustee, also allegedly failed to prudently invest plan assets when they concentrated a majority of plan investments in notes and mortgages without investigating the financial soundness of such investments. These investments allegedly resulted in losses to the plan that impaired its ability to pay benefits when due. The suit seeks a court order to require that the defendants restore all losses with interest, permanently bar them from service to any plan covered by ERISA in the future and to appoint a new fiduciary to oversee the plan.

The suit, filed in the U.S. District for the Southern District of Florida in Miami, resulted from an investigation conducted by the district office in Miami of the Employee Benefits Security Administration (EBSA). In fiscal year 2006, EBSA achieved monetary results of $1.4 billion related to pension, 401(k), health and other benefits for millions of American workers and their families.

Employers and workers can reach the EBSA district office in Miami at 954.425.4022 or they may call EBSA toll-free at 1.866.444.EBSA (3272), for help with problems relating to private-sector retirement and health plans.

(Chao v. X-Ray Equipment Company)
Civil Action No. 07-20183

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.