U.S. Labor Department sues former CEO of defunct Centerbrook, Connecticut, company to recover misused assets of employee 401(k) plan

Boston – The U.S. Department of Labor has sued the former chief executive officer of defunct F & F Industries Inc., formerly of Centerbrook, Connecticut, for alleged misuse of approximately $63,800 of assets of the company’s 401(k) plan and for failure to collect more than $81,000 in employer contributions for employees who worked on jobs covered by the Connecticut state prevailing wage laws.

The lawsuit, filed in the U.S. District Court for the District of Connecticut, alleges that James M. Fox violated the Employee Retirement Income Security Act (ERISA) between February 1, 2004, and the present by failing to remit to the plan employee contributions and participant loan repayments, and by failing to take appropriate steps to collect fringe benefit contributions that the company owed to the plan.

F & F Industries Inc. was the sponsor of the 401(k) plan. Fox was the chief executive officer of the company, husband of the company’s president and sole stockholder, and the plan’s trustee. The company ceased operations in September 2007.

“It is clear that the defendant allowed plan assets to be used to shore up his failing company,” said Jean Ackerman, director of the Boston Regional Office of the Labor Department’s Employee Benefits Security Administration (EBSA). “The law expressly requires plan assets to be used only for the benefit of plan participants and beneficiaries, and the Labor Department will not tolerate the misuse of plan assets for any other purpose. Our legal action seeks full restitution of all misused plan assets in this case.”

The department’s suit seeks a court order permanently prohibiting Fox from serving as a fiduciary to any ERISA-covered plan and from violations of ERISA in the future. The suit also asks the court to order Fox to undo all of his prohibited transactions and to restore to the plan all losses with interest that resulted from his fiduciary breaches. In addition, the suit asks the court to require the defendant to make sure that appropriate allocations and disbursements are made to each of the plan’s participants whose accounts were underfunded because of his violations of the law, and to terminate the plan.

The case was investigated by EBSA’s Boston Regional Office. Employers and workers can contact that office at 617.565.9600 or may call EBSA’s toll-free number, 866.444.3272, for help with any problems relating to private sector pension and health plans. In fiscal year 2008, EBSA achieved monetary results of $1.2 billion related to pension, 401(k), health and other benefits for millions of American workers and their families. Additional information can be found at www.dol.gov/ebsa.

Solis v. James M. Fox
Civil Action Number: 3:09-CV-1397 (JCH)

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