US Department of Labor obtains consent judgment in Perez v. LifeCare of Alabama Inc. involving 401(k) plan in Hartselle, Ala.

Date of Action: Dec. 10, 2013

Type of Action: Consent Judgment and Order

Name(s) of Defendant(s): LifeCare of Alabama Inc. and Susan Clingman-Banks

Allegations: In September 2005, LifeCare of Alabama Inc., based in Hartselle, Ala., established a 401(k) plan for its employees. During the course of an investigation by the U.S. Department of Labor’s Employee Benefits Security Administration, the agency found that from September 2005 to March 2010, the company and Susan Clingman-Banks failed in their fiduciary responsibility to timely forward at least $63,934.69 in employee contributions to the plan and also allowed the funds to be commingled with general company assets.

Resolution: In the consent judgment and order, the defendants agreed to make restitution to the plan in the sum of $78,880.97, representing previously unremitted employee contributions totaling $63,934.69, plus interest on those funds of $14,945.88 through Nov. 30, 2013. The defendants are required to make a restitution payment of $39,000.00 to the plan on or before Jan. 15, 2014, and the remaining unpaid balance and accrued interest by March 31, 2014. In addition, defendants LifeCare and Clingman-Banks are permanently enjoined and restrained from violating the provisions of Title I of the Employee Retirement Income Security Act. Also, defendants LifeCare and Clingman-Banks are permanently enjoined from acting as a fiduciary, trustee, agent, or representative in any capacity to any employee benefit plan, as defined by ERISA. The order appoints M. Larry Lefoldt, CPA, of Lefoldt & Co., P.A in Ridgeland, Miss., as successor fiduciary for the plan for the purpose of collecting, marshalling, and administering all of the plan's assets.

Court: United States District Court for the Northern District of Alabama, Northeastern Division

Docket Number: 5:12-cv-02147-CLS

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