U.S. Labor Department obtains restitution for pension plans of defunct Tennessee company

Archived News Release — Caution: Information may be out of date.

Atlanta – A federal district court in Chattanooga, Tennessee, has ordered the former controller of Standard Coosa Thatcher (SCT) Yarns Inc. to repay $16,666.67 to the company’s pension plans as restitution for her role in making improper loans, transfers and investments to companies affiliated with executives of SCT Yarns. More than $6.3 million in restitution is to be restored to the plans from other responsible parties based on court judgments and a settlement with the U.S. Department of Labor.

“This case reaffirms our commitment to vigorously enforce federal benefits law,” said Bradford P. Campbell, assistant secretary of labor for the Labor Department’s Employee Benefits Security Administration (EBSA). “Our action today is designed to recoup assets to pay future retirement benefits of participants and their beneficiaries.”

Under the consent judgment and order, Belinda Combs must make restitution to the plans, pay a civil monetary penalty of $3,333.33 to the Labor Department and waive her right to benefits from the plans. She also is permanently barred from serving in a fiduciary capacity to any plan governed by the Employee Retirement Income Security Act (ERISA) in the future.

A Labor Department lawsuit, filed simultaneously with the judgment on October 16, alleges that Belinda Combs allowed plans assets to be transferred and used for the benefit of Kenneth Combs, his companies and others.

Now defunct, SCT Yarns, which was located in Chattanooga, manufactured yarn for the textile industry. The company sponsored two retirement plans covering 771 participants and had $65,801 in assets, according to the latest data available to the department. The Pension Benefit Guaranty Corp. has taken over the retirement plans for hourly and salaried employees and will pay benefits to retirees.

The court judgment resulted from an investigation by EBSA’s Atlanta Regional Office. 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.

Chao v. Combs
Civil Action Number 1:07-cv-242

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Archived News Release — Caution: Information may be out of date.