U.S. Labor Department obtains judgment to recover nearly $1.2 million for Miami-based employee retirement plan

Archived News Release — Caution: Information may be out of date.

Miami – The U.S. Department of Labor has obtained a default court judgment providing restitution of $1,154,848.25 plus interest to the profit-sharing retirement plan of Miami-based X-Ray Equipment Co., removing the company as a fiduciary to the plan and appointing an independent fiduciary to oversee it.

“These workers’ retirement dreams were threatened by the mismanagement of their retirement plan,” said Secretary of Labor Elaine L. Chao. “This legal action restores nearly $1.2 million to pay these workers retirement benefits and ensures the plan’s future integrity by the appointment of an independent fiduciary.”

The department’s lawsuit alleged that X-Ray Equipment and its president, Colen Carter, violated the Employee Retirement Income Security Act (ERISA) between Septempber 30, 2000, and the present by failing to collect outstanding loans and interest owed to the plan, and to forward to the plan loan payments made by participants and third-party borrowers. The payments 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 the investments in notes and mortgages without investigating the financial soundness of the investments. These investments allegedly resulted in losses to the plan that impaired its ability to pay benefits when due.

The court appointed Jeanne Barnes Bryant as the independent fiduciary. Bryant has authority to collect assets owed to the plan, evaluate outstanding claims, and make payments to participants and creditors.

The judgment, entered in the U.S. District Court for the Southern District of Florida in Miami, resulted from an investigation conducted by the Miami District Office of the Labor Department’s 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 EBSA’s Miami office at 954.425.4022 or 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 Co.
Civil Action No. 07-20183

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Archived News Release — Caution: Information may be out of date.