U.S. Department of Labor sues corporate parent of Academic Financial Services and trustees to restore losses to Tampa 401(k) plan

Archived News Release — Caution: Information may be out of date.

Atlanta – The U.S. Department of Labor has sued Business Financial Solutions Inc., which operated as Academic Financial Services, and trustees of its 401(k) plan, for alleged violations of the Employee Retirement Income Security Act (ERISA) involving delinquent employee and employer contributions owed to the plan.

The lawsuit alleges that trustees Wayne Morgan and Michael Murray failed to forward to the plan $48,691 in employee contributions withheld from paychecks between May 2005 and January 2007. Instead, the funds allegedly were co-mingled with the general assets of the Tampa, Florida, company. About the same time, the company failed to make basic matching contributions on behalf of participants, as required by plan documents. Failure to do so resulted in the plan losing $28,756.

Filed in the U.S. District Court for the Middle District of Florida, the suit seeks to restore plan losses and any lost earnings on those contributions. The department also asks the court to remove the trustees as fiduciaries of the Academic Financial Services 401(k) Savings Plan, appoint a successor trustee to distribute any proceeds to the participants, and permanently bar the defendants from serving as fiduciaries of any ERISA-covered plan.

“The Labor Department will take whatever action appropriate to protect the retirement benefits of employees, including initiation of litigation when necessary,” said Rebecca Marshall, director of the Atlanta Regional Office of the department’s Employee Benefits Security Administration (EBSA), which investigated this case.

Business Financial Solutions operated Academic Financial Services as a student loan consolidator, acting as a loan originator and as broker for education loans sold in the secondary market.

Employers and workers can reach EBSA’s Atlanta Regional Office at 404.302.3900 or toll-free at 866.444.3272 for help with problems relating to private sector retirement and health plans. In fiscal year 2007, EBSA achieved monetary results of $1.5 billion related to pension, 401(k), health and other benefits for millions of American workers and their families.

Chao v. Business Financial Solutions
(Civil Action Number 8:08-cv-2366-T-33EAJ)

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