Judge orders appointment of independent fiduciary to administer Bemcore Inc. Incentive Plan from defunct Dayton, Ohio, company

Date of Action: Jan. 22, 2013

Type of Action: Default judgment

Name(s) of Defendant(s): Gary L. Merritt, as fiduciary to the Bemcore Inc. Incentive Plan, Bemcore, Inc. and Bemcore, Inc. Incentive Plan in Dayton, Ohio

Allegations: Merritt and Bemcore Inc. have not taken fiduciary responsibility for the operation and administration of the Bemcore Inc. Incentive Plan and its assets since December 2010 when Merritt, who was the company's vice president, was barred from acting as a fiduciary to an employee benefit plan.

Merritt was barred after being convicted Nov. 23, 2010, of embezzlement and theft from an employee benefit plan and was ordered to pay restitution to the plan. From the beginning of 2009 until the spring of 2010, Merritt had illegally transferred employee contributions out of the Bemcore 401(k) plan to Bemcore Inc.'s corporate bank account and used the funds for business purposes. Merritt was sentenced in U.S. District Court, Southern District of Ohio, Western Division to serve five years of probation and to pay $182,070.56 in restitution within the year. The sentence followed Merritt's guilty plea, filed in August 2010, to one count of theft from an employee retirement plan, in violation of 18 U.S.C. § 664.

No successor person or entity has been named to administer the plan since December 2010.

Resolution: Merritt has been making restitution payments to the plan pursuant to the restitution order entered in USA vs Gary L. Merritt, United States District Court, Southern District Ohio Western Division.

The court has ordered Merritt to be removed from his position as a fiduciary to the plan and an independent fiduciary is to be appointed to administer the Plan. As of Nov. 7, 2012, the plan had nine participants and assets of $168,541.74. Merritt is also permanently enjoined for serving or acting as a fiduciary or service provider with respect to any employee benefit plan subject to the Employment Retirement Income Security Act.

The investigation was conducted by EBSA's Cincinnati Regional Office and prosecuted by the United States Attorney's Office for the Southern District of Ohio.

EBSA protects the security of the retirement, health and other workplace-related benefits of America's workers, retirees and their families. Employers and workers can reach EBSA toll-free at 866-444-3272 for help with problems related to private sector retirement and health plans. Additional information can be found at http://www.dol.gov/ebsa.

Court: Southern District of Ohio, Dayton, Ohio

Docket Number: 3:12-cv-00250

U.S. Department of Labor 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.