Miami tool manufacturer agrees to restore more than $107,000 to company’s pension profit sharing plan following US Labor Department investigation

MIAMI – The U.S. Department of Labor has obtained a consent judgment that restores more than $107,775 to participants in the Miami-based Michigan Drill Corp. Profit Sharing Plan.

The judgment, approved by the U.S. District Court for the Southern District of Florida, Miami Division, requires the defendants – Republic Drill/APT Corp. and Hyman Ash, owner of both this company and its predecessor company, Michigan Drill Corp. – to fund the plan for the benefit of participants who will receive allocations based on their percentage of interest in the plan as of Dec. 31, 2009. Ash agrees to waive his interest in the plan and to complete eight hours of fiduciary training annually for as long as he remains a fiduciary of a plan covered by the Employee Retirement Income Security Act.

The Labor Department’s Employee Benefits Security Administration alleged that the defendants caused losses to the company’s pension profit sharing plan through improper activities that violated ERISA. Specifically, defendants allegedly allowed the plan to extend a line of credit to Tool & Equipment Sales Co. which became a prohibited transaction when Republic Drill/APT Corp. later acquired the company.

In 2001, the outstanding balance on the loan exceeded $596,000. The defendants failed to collect payments when the loan was in default, and the plan incurred losses when the outstanding balance was not paid in full.

The defendants also allowed the plan to purchase artwork and real estate assets but did not regularly require independent appraisals of the assets to determine their true value.

“It is important that these funds are being restored for the benefit of pension plan participants who are counting on them for their retirement,” said R.C. Marshall, EBSA regional administrator in Atlanta. “The Labor Department is vigorously working to ensure that employees’ pensions are safe and available to them.”

This case resulted from an investigation conducted by EBSA’s Atlanta Regional Office. Employers and workers can reach that 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, visit http://www.dol.gov/ebsa.

Solis v. Michigan Drill Corp.
Civil Action File Number 1:10-cv-21013-KMM

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