US Department of Labor sues defunct Georgia software company to restore assets to company’s 401(k) retirement plan

MARIETTA, Ga. – The U.S. Department of Labor has sued By Design Consulting Corp. and its owner, Randall Williamson Smith, to restore $25,978.39 in assets to the defunct company’s 401(k) retirement plan after an investigation by the department’s Employee Benefits Security Administration found violations of the Employee Retirement Income Security Act.

“Employees should expect that their hard-earned savings will be properly managed when they contribute to retirement plans. The Labor Department holds all fiduciaries – in this case the employer – accountable to act in the best interests of plan participants,” said Isabel Colon, EBSA’s regional director in Atlanta.

Filed in the U.S. District Court for the Northern District of Georgia, Atlanta Division, the lawsuit alleges that between August 2006 and April 2009, the company withheld and failed to remit $23,737.50 in employee contributions to the By Design Consulting Corp. 401(k) Retirement Plan.

Between May 2005 and April 2009, the defendants failed to ensure that amounts withheld from employees’ paychecks were remitted to the plan as soon as they could reasonably be segregated from the assets of the employer. Participant contributions, which were withheld on a biweekly basis, were regularly remitted between 30 and 386 calendar days after being withheld, resulting in lost interest and opportunity costs.

In May 2006, the plan granted a loan of $14,919.03 to a plan participant without requiring any promissory note or other loan documentation. Between August 2006 and April 2009, the company withheld $2,240.89 from the plan participant’s paychecks as loan repayments but failed to forward those funds to the retirement plan.

The suit further alleges that the defendants’ retention of participant contributions and loan repayments constitutes a direct or indirect transfer of plan assets or use for the benefit of the company, and the defendants dealt with the assets of the plan in their own interest and for their own account by engaging in transactions that are prohibited by ERISA.

The Labor Department is asking the court to order that the plan be set off of Smith’s individual retirement plan account against the amount of losses resulting from his fiduciary breaches, unless the losses are otherwise restored to the plan by the defendants.

The suit asks that the defendants be ordered to restore to the plan all losses, including lost earnings and opportunity costs, which occurred as a result of the breaches of their fiduciary obligations, and be permanently barred from serving as fiduciaries for any employee benefit plan subject to ERISA.

By Design Consulting Corp. was located in Marietta, Ga., and sold and installed computer software until the company was administratively dissolved in September 2010.

This case was investigated by EBSA’s Atlanta Regional Office. It is being litigated by the Labor Department’s Regional Office of the Solicitor in Atlanta. 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. By Design Consulting Corp.
Civil Action File Number 1:12-cv-0360-MHS

U.S. Department of Labor news materials are accessible at www.dol.gov. The information above is available in large print, Braille, audio tape or disc from the COAST office upon request by calling 202-693-7828 or TTY 202-693-7755.