U.S. Labor Department sues trustees of Westra Construction retirement plan in Waupun, Wis., over plan losses

Waupun, Wis. – The U.S. Department of Labor has sued a trustee of the Westra Construction Inc. Employee Stock Ownership Plan (ESOP) for alleged violations of the Employee Retirement Income Security Act (ERISA) that resulted in losses to the company-sponsored ESOP.

The lawsuit alleges that trustee Steven D. Westra caused the ESOP to purchase 40,000 shares of non-voting convertible preferred company stock for $4 million on the basis of valuation reports and fairness opinions he knew or should have known were flawed. The stock was purchased with assets transferred from another retirement plan sponsored by the company. On July 9, 2005, the company ceased operations and preferred stock purchased by the ESOP 21 months earlier became worthless.

"This defendant diverted retirement assets to subsidize corporate activities, thereby jeopardizing the future retirement income of the workers," said Phyllis C. Borzi, assistant secretary of the Labor Department's Employee Benefits Security Administration (EBSA). "Those who violate their duty of loyalty to benefit plans will be held accountable to the fullest extent under the law."

Westra Construction Inc. was a nationwide general contractor performing commercial, industrial, institutional and retail construction work.

The Labor Department has asked the court to order the trustee to restore all losses owed to the ESOP as a result of his fiduciary breaches and to correct any transactions prohibited by law. The department also seeks to bar the defendant from serving as a fiduciary to any ERISA-covered employee benefit plan.

The suit, filed in federal district court in Milwaukee, Wis., resulted from an investigation conducted by EBSA's Chicago Regional Office. 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 the Chicago Regional Office at 312.353.0900 or toll free at 866.444.3272 for help with problems relating to private sector retirement and health plans.

Solis v. Steven D. Westra
Civil Action Number 10-C-0176

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