U.S. Labor Department sues Tucson, Ariz., sand and gravel company to protect employee benefit assets

TUCSON, Ariz. - The U.S. Department of Labor has sued a former Tucson company and its owner for failing to protect the interests of the participants in the company's 401(k) profit sharing plan. In the suit, filed in the U.S. District Court for the District of Arizona, the Labor Department is seeking repayment of at least $2,000 in employee salary reductions, plus lost opportunity costs from defunct Sonora Environmental LLC and its former owner and president, Lee Jolley.

"This suit seeks to protect workers' contributions made from their hard-earned paychecks," said Crisanta Johnson, the Los Angeles regional director of the department's Employee Benefits Security Administration. "Fiduciaries must act in the best interest of the plan's participants and beneficiaries, and when we find evidence they are not, the department will act to protect the retirement assets of America's workers and retirees."

The suit alleges that Sonora Environmental and Jolley, a resident of Laguna Niguel, Calif., failed to forward to the plan at least $2,000 in employee contributions and loan repayments, comingled plan assets with those of the company's accounts and used the assets for purposes unrelated to the plan. At the time of the improper actions, Jolley was a fiduciary and trustee of the plan.

The suit also seeks to remove Jolley as a plan fiduciary, bar him from serving as a fiduciary or service provider to benefit plans covered by the Employee Retirement Income Security Act in the future. It also seeks to appoint an independent fiduciary to distribute the remaining plan assets to participants and beneficiaries and to terminate the plan. Sonora Environmental LLC produced sand, gravel and concrete before it closed in October 2008.

This case is part of EBSA's employee contribution project to safeguard workers' contributions to 401(k) and health benefit plans. 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. Additional information can be found at http://www.dol.gov/ebsa.

Solis v. Sonora Environmental LLC

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