US Labor Department sues defunct North Carolina mental health clinic to recover assets for 401(k) plan and have them distributed to plan participants

WINSTON-SALEM, N.C. – The U.S. Department of Labor has sued defunct mental health services provider Embrenche LLC and the company’s owners, Marty Hickman, Joe Parker and Avery Hairston, for allegedly violating the Employee Retirement Income Security Act.  The lawsuit alleges that the defendants diverted employees’ contributions away from the company’s 401(k) profit-sharing plan, and failed to administer and terminate the plan after the company ceased operating.

Filed in the U.S. District Court for the Middle District of North Carolina, Greensboro Division, the suit alleges that the defendants withheld employee contributions but failed to forward them to the plan, resulting in losses of $7,255 in contributions plus $1,494 in lost earnings opportunities. The defendants allowed the funds to be commingled with the general assets of Embrenche. Since the company stopped operating, the defendants have failed to administer the plan and have effectively abandoned it, resulting in plan participants being unable to gain access to their funds.

“Plan participants are counting on these assets for their retirement, and the Labor Department holds fiduciaries fully accountable for the funds entrusted to their care,” said Isabel Colon, director of the Atlanta Regional Office of the department’s Employee Benefits Security Administration.

The suit seeks a court order to remove the defendants as plan fiduciaries, require them to restore plan losses, set off individual plan accounts against the amount of losses and bar the fiduciaries from serving in the future for any plan subject to ERISA. EBSA is asking that the court appoint a successor fiduciary to administer the plan and distribute the remaining assets to plan participants.

EBSA protects the retirement, health and other workplace-related benefits of America’s workers, retirees and their families. The agency oversees approximately 708,000 private sector retirement plans, 2.8 million health plans and other plans that provide benefits to more than 150 million Americans. Collectively, these plans hold more than $6 trillion in assets.

This case was investigated by EBSA’s Atlanta Regional Office. The case is being litigated by the Labor Department's Atlanta Regional Solicitor's Office. Employers and workers can contact EBSA 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 www.dol.gov/ebsa.

Solis v. Embrenche LLC
Civil Action File Number 1:11-cv-00379

# # #

U.S. Department of Labor releases are accessible on the Internet at www.dol.gov. The information in this news release will be made available in alternate format (large print, Braille, audio tape or disc) from the COAST office upon request. Please specify which news release when placing your request at 202-693-7828 or TTY 202-693-7755. The Labor Department is committed to providing America’s employers and employees with easy access to understandable information on how to comply with its laws and regulations. For more information, please visit www.dol.gov/compliance.