U.S. Labor Department obtains judgment seeking restoration of more than $50,000 for participants of Phoenix 401(k) plan

Archived News Release — Caution: Information may be out of date.

Phoenix – The U.S. Department of Labor has obtained a default judgment requiring Independent Import Services Inc., an automotive repair company with shops in Phoenix and Tempe, Arizona, and its 401(k) trustee to pay $50,305.66 as restitution for delinquent contributions and loans owed to the plan.

The judgment, entered in the U.S. District Court for the District of Arizona, provides for the offset of the plan account of Lee Morris to repay money owed to the plan, removes him as trustee, and orders the appointment of an independent trustee to administer the plan. Morris, who is also the owner of the company, is permanently barred from serving as a fiduciary or service provider to any plan governed by the Employee Retirement Income Security Act (ERISA). He declared personal bankruptcy in 2006.

Under the judgment, the independent trustee has authority to terminate the plan and distribute $106,823 in plan assets to 16 eligible participants.

“We are pleased that the court’s action will allow these assets to be distributed to the employees who participated in the plan,” said Billy Beaver, regional director of the Labor Department’s Employee Benefits Security Administration (EBSA) office in Los Angeles, which investigated the case. “By distributing these funds, we are providing employees the opportunity to plan and save for their retirement.”

On September 11, 2006, the department sued Morris and the company for alleged violations of ERISA. The defendants allegedly failed to forward $31,923 in contributions withheld from employees’ paychecks to the plan from October 2001 to December 2003. In addition, they allegedly failed to collect delinquent loans and lost earning on contributions owed to the 401(k).

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 with questions or concerns regarding their private sector pension and health plans can contact EBSA’s Los Angeles Regional Office at 626.229.1000 or toll-free at 1.866.444.EBSA (3272). Information also is available on the agency’s Web site at www.dol.gov/ebsa.

Chao v. Morris
Civil Action Number: CV06-1581-PHX-DGC

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Archived News Release — Caution: Information may be out of date.