U.S. Labor Department actions recover more than $90,000 from Cleveland business executive for retirement savings plan contributions

Archived News Release — Caution: Information may be out of date.

Cleveland – The U.S. Department of Labor has recovered nearly $75,000 in employee contributions, plus over $18,000 in lost interest, owed to the Jared Group Inc. 401(k) Plan by company president Robert L. Johnson, who the department alleged in a lawsuit had failed to forward employee contributions to the company’s retirement plan and to segregate plan contributions from the general operating assets of the company.

In a consent order and judgment filed in federal district court in Cleveland, Johnson agreed to pay the contributions, which he already has restored to the plan, as well as the interest.

This judgment resolves the department’s suit alleging that Johnson violated the Employee Retirement Income Security Act (ERISA) by failing to remit contributions deducted from employees’ paychecks to the plan in a timely manner, if at all, during the period from January 2001 to December 2004, when the company terminated business operations. Jared was a Cleveland-based information technology and software systems consulting business.

The judgment also permanently enjoins Johnson from serving as a fiduciary to ERISA-covered plans and requires the appointment of an independent fiduciary to terminate this plan and distribute its assets to participants and beneficiaries.

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

Employers with similar problems who are not yet subjects of investigation by EBSA may be eligible to participate in the 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.

Employers and workers can reach EBSA’s Cincinnati Regional Office at 859.578.4680 or toll-free 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 the pension, 401(k), health and other benefits for millions of American workers and their families.

Chao v. Johnson
Civil Action Number 1:07CV653

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Archived News Release — Caution: Information may be out of date.