U.S. Department of Labor sues fiduciaries of former Raleigh, NC-based human resources company to restore employee health and 401(k) assets

Raleigh, N.C. – The U.S. Department of Labor's Employee Benefits Security Administration (EBSA) has sued fiduciaries of the former Raleigh-based Castleton Group to restore more than $500,000 in plan losses that resulted from violations of the Employee Retirement Income Security Act (ERISA).

"For a company that specialized in providing human resources services to others, it is unconscionable that it would fail in its own fiduciary responsibilities to more than 1,500 workers employed for its clients as well as its own staff," said R.C. Marshall, EBSA's regional administrator in Atlanta.

Filed in the U.S. District Court for the Eastern District of North Carolina in Raleigh, the lawsuit alleges that Suzanne Clifton and James McLamb breached their fiduciary responsibilities when they failed to forward employer and employee contributions owed by the company to the health plan's third party claims administrator.

The suit also alleges that the defendants failed to forward employees' 401(k) contributions and employee loan repayments, and did not make matching contributions to the 401(k) plan as required by plan documents.

Contributions that should have been made to health and 401(k) plans in November and December 2007 allegedly were comingled with the company's general assets. The company announced its closure in December 2007 and filed for bankruptcy that same month.

The suit seeks to require the defendants to restore all losses to the plans, including lost interest or lost opportunity costs, and to offset the defendants' 401(k) plan accounts by the amount of losses if the losses are not otherwise restored by the defendants. In addition, the suit asks that the defendants be permanently barred from serving as fiduciaries of any employee benefit plan subject to ERISA.

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. 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. For more information, see http://www.dol.gov/ebsa.

Solis v. Suzanne Clifton
Civil Action File Number 4:10-cv-1

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