U.S. Labor Department Obtains Consent Judgment with Duluth, Minnesota Business Officer Regarding Employee Stock Ownership Plan

Archived News Release — Caution: Information may be out of date.

Duluth, Minnesota - The U.S. Department of Labor has obtained a consent order and judgment requiring the former president of Arrowhead Equipment Co., Duluth, Minnesota, to forfeit his right to benefits in the Arrowhead Equipment Co. Employee Stock Ownership Program (ESOP) and bar him from serving in a fiduciary capacity to any employee benefit plans governed by the Employee Retirement Income Security Act (ERISA).

“The department is committed to doing everything we can to ensure that plan participants receive the money owed to them,” said Steven Eischen, director of the Kansas City regional office of the Employee Benefits Security Administration (EBSA), which investigated the case.

Gunnar Viljaste agreed to forfeit his benefit account to restore in part losses resulting from his fiduciary breaches. The settlement also appoints an independent fiduciary to oversee the assets of the ESOP, and if necessary, distribute the assets to eligible participants and beneficiaries and terminate the plan. Arrowhead Equipment Co. provided tires and parts for trucks as well as automotive services, but has ceased operation.

The Labor Department sued Viljaste for failure to terminate the plan and distribute assets to participants and beneficiaries after the company ceased operations. He and the company, 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 judgment, entered in federal district court in Duluth, Minn., resulted from an investigation conducted by the Kansas City regional office of 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 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).

(Chao v. Gunmar Viljaste)
Civil Action No. 06-3813

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Archived News Release — Caution: Information may be out of date.