U.S. Labor Department obtains judgment restoring nearly $150,000 to employee stock ownership plan of upstate New York auto supplier

Binghamton, New York – The U.S. Department of Labor has obtained a consent judgment requiring Kellogg Auto Supply Co. Inc. of Cortland, New York, and company president and general manager Richard Coats to restore $149,573 to the company’s employee stock ownership plan.

The Labor Department sued Coats and the company last year for alleged violations of the Employee Retirement Income Security Act, the federal law that protects private sector pension and employee benefit plans. The lawsuit resulted from an investigation by the Labor Department’s Employee Benefits Security Administration Boston Regional Office, which determined that the defendants had failed to carry out a key requirement of the plan document.

The department’s lawsuit resolved by this judgment alleged that, during the period from 1999 through 2007, the company and plan fiduciaries failed to obtain required annual valuations of Kellogg stock. As a result, the plan balances of several participants were erroneously reported. In addition, at least nine eligible participants failed to receive proper distributions from the plan during that time.

The consent judgment, entered in the U.S. District Court for the Northern District of New York in Binghamton, permanently prohibits Coats from serving as a fiduciary or service provider for any employee benefit plan covered by ERISA and orders the defendants to repay to the plan $149,573. The court order also requires the defendants to ensure proper distributions of plan account balances currently owed to all eligible participants and beneficiaries, and to pay to the Labor Department a civil penalty of $14,957.

“We are pleased we were able to bring this matter to a resolution favorable to the plan’s participants, who now will receive all of the retirement benefits to which they are entitled,” said Jean Ackerman, regional director for EBSA in Boston.

In fiscal year 2009, the department achieved monetary results of $1.3 billion in pension, 401(k), health and other benefits for millions of American workers and their families. Employers and workers can contact EBSA’s Boston Regional Office at 617.565.9600 or toll-free at 866.444.3272 for more information on ERISA’s requirements or for help with problems relating to private sector pension and health plans. Additional information can be found at http://www.dol.gov/ebsa.

Solis v. Coats
Civil Action Number: 3:09-CV-00109-GTS-DEP

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