U.S. Labor Department sues head of defunct Phoenix company over misuse of retirement fund

Archived News Release — Caution: Information may be out of date.

San Francisco – The U.S. Department of Labor has sued the former president and chief executive officer of a defunct Phoenix company for allegedly misusing assets of the CTC Engineering money purchase plan of Scottsdale, Arizona, to pay personal and corporate expenses.

The Labor Department lawsuit, filed in U.S. district court in Phoenix, alleges that John Michael Lundberg of Scottsdale withdrew funds from CTC Engineering’s money purchase plan for the purpose of paying expenses not associated with the plan. Lundberg was a plan trustee at the time. He allegedly withdrew $37,095 from other participants’ accounts between July 2001 and May 2004, and failed to collect $13,920 in mandatory company contributions owed for the plan year that ended March 31, 2000.

“These funds were part of a compensation package promised to employees,” said Crisanta Johnson, regional director of the department’s Employee Benefits Security Administration in Los Angeles. “The plan was not designed to be used by corporations and their executives. A trustee has an obligation to put the interests of the plan participants first.”

The suit seeks to require that Lundberg restore all losses plus interest to the plan, remove him as a plan trustee and appoint an independent fiduciary – at Lundberg’s expense – to terminate the plan and distribute its assets. The suit also asks the court to permanently bar Lundberg from serving as a fiduciary of any plan covered by the Employee Retirement Income Security Act (ERISA).

CTC Engineering produced packaging used for shipping semi-conductor micro-processors.

The action resulted from an investigation conducted by EBSA’s Los Angeles Regional Office. Employers and workers with questions or concerns regarding their private sector pension and health plans can contact the regional office at 626.229.1000 or toll-free at 866.444.3272. Information is also available on the agency’s Web site at www.dol.gov/ebsa. In fiscal year 2007, EBSA achieved monetary results of $1.5 billion related to 401(k), health and other benefits for millions of American workers and their families.

Chao v. John Michael Lundberg
Civil Action Number 2:08-cv-1344 ROS

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Archived News Release — Caution: Information may be out of date.