US Department of Labor files suit to recover an additional $57,000 for workers in five Nashville, TN, area retirement plans

NASHVILLE, Tenn. – The U.S. Department of Labor has filed a lawsuit in the U.S. District Court for the Middle District of Tennessee against Aaron Donald Vallett and his wholly-owned company, A.D. Vallett & Co. LLC, which provided third-party administrative services to a number of retirement plans in the Nashville area. The company also provided brokerage services and financial advice to a number of individual and corporate clients.

In its complaint the department alleges that in December 2009 and January 2010, in violation of the Employee Retirement Income Security Act, Vallett illegally removed money from participant accounts in five retirement plans he administered and placed it into his company’s general operating fund. Vallett used the money for personal expenses and to pay his company’s operating expenses. The total amount stolen was $888,237.69.

The department further alleges that Vallett falsified the plans’ records by indicating that the withdrawals had been placed in outside brokerage accounts. As such, it appeared that the funds were still in the plans. After the unauthorized withdrawals were discovered, Vallett met with a number of the plan trustees and asked them to sign a form that would allow for the funds to be placed back into the plans and a form that indicated that they had authorized the withdrawals.

A receiver for the assets of Vallet’s terminated company was appointed by the court in August 2010. The receiver proceeded to file a claim against Vallet’s insurer in the amount withdrawn from the five retirement plans. Although the full amount stolen from the plans was restored in August 2011, lost earnings and interest on these funds were not restored. Accordingly, the department seeks approximately $57,606.01 in lost earnings and interest, and a permanent injunction against Vallett from acting in a future fiduciary capacity to any ERISA-covered plans.

“Although the assets taken from plan participant accounts were restored, the gains that could have been made on these investments were not,” said Isabel Colon, director for the Employee Benefits Security Administration’s Atlanta regional office. “Today’s action is to ensure that those retirement savers receive all of what is rightfully theirs.”  

Vallett has been criminally prosecuted by the Department of Justice for four counts of theft from an ERISA plan. On July 9, Vallett entered a guilty plea for all counts. On Oct. 1, he was sentenced to 120 months in prison, three years of supervised release and was ordered to pay restitution to his company’s insurer in the amount of $888,237.69. Additionally, in the same criminal action, Vallett was also prosecuted for and pleaded guilty to six counts of mail fraud and six counts of wire fraud. He was ordered to pay restitution to the victims of his crimes for their losses totaling $4,604,311.08. In total, Vallett has been ordered to pay $5,492,548.77 in restitution.

Vallet formed his company in April 2006. Among the retirement plans that the company provided services to were Mephisto Inc. 401(k) Profit Sharing Plan and Trust; Wiley Group Inc. 401(k) Profit Sharing Plan and Trust; Southeastern Building Corp. 401(k) Profit Sharing Plan and Trust; Timothy E. McNutt Sr., D.D.S., 401(k) Profit Sharing Plan and Trust; and Project C.A.M.P. 401(k) Profit Sharing Plan and Trust. 

EBSA’s Atlanta Regional Office personnel investigated this case, and the department’s solicitor in Atlanta is litigating the case.

Solis v. A.D. Vallet & Co., LLC
Civil Action Number:  3:13-cv-00105

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.