U.S. Labor Department Sues Former Officer of Wixom, Michigan, Business to Restore Delinquent Contributions to 401(k) Plan

Archived News Release — Caution: Information may be out of date.

Wixom, Michigan - The U.S. Department of Labor has sued William G. Kennedy, former vice president of Kennedy Boring and Machine Inc. in Wixom, Michigan, for failing to forward employee contributions and loan repayments to the company’s 401(k) plan and to segregate plan contributions from the general operating assets of the company.

“The department will act when plan fiduciaries fail to carry out their duty to protect the retirement plan assets held on behalf of participants,” said Joseph Menez, director of the Labor Department’s Employee Benefits Security Administration (EBSA) district office in Cincinnati.

The lawsuit alleges that Kennedy, who served as trustee of the 401(k) plan, violated the Employee Retirement Income Security Act by failing to remit employee contributions made between May 2000 and December 2002, even though assets were deducted from workers’ paychecks as plan contributions or loan repayments. The suit seeks to require Kennedy to restore to the plan all contributions plus interest, remove him as plan fiduciary and correct any prohibited transactions. The suit also seeks the appointment of an independent fiduciary to terminate the plan and distribute its assets to eligible participants and beneficiaries.

The company ceased operation in December 2002 and was dissolved by the state of Michigan in 2006. Assets held in individual 401(k) plan accounts were never distributed to the rightful owners.

This suit resulted from an investigation conducted by EBSA’s Cincinnati office. Employers and workers can reach that office at 859.578.4680 or through EBSA’s toll-free line at 1.866.444.EBSA (3272) for help with problems relating to private sector retirement and health plans. 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 with similar problems that are not yet subjects of investigation by EBSA may be eligible to participate in the Labor Department’s Voluntary Fiduciary Correction Program (VFCP). Participation in the VFCP 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.

Chao v. Kennedy
Civil Action No. 2:07cv10772

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Archived News Release — Caution: Information may be out of date.