US Labor Department sues to restore more than $920,000 diverted from California-based Journey Electrical Technologies Inc. 401(k) plan

LOS ANGELES – The U.S. Department of Labor has sued executives of Journey Electrical Technologies Inc. of Laguna Hills, Calif., for allegedly failing to collect more than $920,000 in employee and employer contributions owed to the company’s 401(k) plan in violation of the Employee Retirement Income Security Act.

The lawsuit, filed in the U.S. District Court for the Central District of California, alleges that Timothy Hardt and Mark Dell Donne failed to collect employer and employee contributions owed to the plan between 2004 and 2008. The money was co-mingled with that of the company and used for purposes unrelated to the plan. Dell Donne is the president and chief executive officer of the company and Hardt is a former officer. At the time of the violations, the defendants were trustees of the plan, which covered approximately 264 employees.

“The flagrant misuse of pension assets to subsidize corporate activities jeopardizes the retirement income of workers and will not be tolerated,” said Secretary of Labor Hilda L. Solis. “We took legal action to protect the retirement security of these workers and ensure that they receive the benefits they are due.”

Journey Electrical Technologies Inc. is an electrical contracting company that performed work on municipal and state public works projects. The 401(k) plan was funded, in part, with fringe-benefit contributions from the company that are required to be made under prevailing wage laws. The plan also received contributions from employees through payroll deductions.

The suit asks the court to require that Hardt and Dell Donne restore contributions and lost opportunity costs owed to the plan, and also to remove Dell Donne as a fiduciary to this plan as well as bar both Hardt and Dell Donne from serving as fiduciaries or service providers to any plan governed by ERISA. In addition, the suit asks the court to appoint an independent fiduciary to manage and administer the plan.

In fiscal year 2009, the Labor Department’s Employee Benefits Security Administration achieved monetary results of $1.3 billion related to the pension, 401(k), health and other benefits for millions of American workers and their families. Employers and workers can reach EBSA’s Los Angeles Regional Office at 626-229-1000 or toll-free at 866-444-3272 for help with problems relating to private sector retirement and health plans.

Employers with similar problems who are not the subject of investigations by EBSA may be eligible to participate in the department’s Voluntary Fiduciary Correction Program. Participation in the program requires employers to correct any violations but allows them to avoid EBSA enforcement actions and civil penalties as well as any applicable excise taxes. Additional information can be found at http://www.dol.gov/ebsa.

Solis v. Hardt Civil Action Number 8:10-cv-01428-DOC-MAN
In re: TIMOTHY JOHN HARDT and MARK DELL DONNE (Case No.: 72-031212)