U.S. Labor Department sues defunct Bangor, Maine, company and owner to recover misused assets of employee SIMPLE IRA plan

Boston – The U.S. Department of Labor has sued defunct Northern Log Homes Inc., formerly based in Bangor, Maine, and former owner Michael Hartt, for allegedly misusing more than $9,000 in assets of the company’s savings incentive match plan for employees individual retirement account (SIMPLE IRA) established for the company’s employees.

The lawsuit, filed in the U.S. District Court for the District of Maine, alleges that Hartt and the company violated their fiduciary duties under the Employee Retirement Income Security Act (ERISA) between October 5, 2007, and April 25, 2008. The defendants are alleged to have failed to remit to the plan employee contributions withheld from their paychecks. The company went out of business in June 2008.

The department’s suit alleges that the defendants withheld $9,290.25 from employees’ paychecks as contributions for their plan accounts but used the money to pay company debts instead of forwarding the money to the plan.

“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,” said Jean Ackerman, director of the Boston Regional Office of the Labor Department’s Employee Benefits Security Administration (EBSA). “This misuse of plan assets is a clear violation of ERISA.”

The department’s suit seeks a court order permanently prohibiting Hartt from serving as a fiduciary or service provider to any ERISA-covered plan; requiring both defendants to restore to the plan all losses plus interest; and requiring the defendants to correct any prohibited transactions.

The case was investigated by EBSA’s Boston Regional Office. Employers and workers can contact that office at 617.565.9600 or toll-free at 866.444.3272 for help with any problems relating to private sector pension and health plans. In fiscal year 2009, EBSA achieved monetary results of $1.3 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. Michael Hartt
Civil Action Number: 1:09-CV-00620-JAW

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