US Department of Labor obtains court order freezing 401(k) fiduciary's account

SEATTLE — The U.S. Department of Labor has obtained a court order from the U.S. District Court for the Western District of Washington that temporarily freezes the account balance of Brenda Lukas-Jones, former president of Lukas Machine Inc., in the company's 401(k) profit sharing plan and trust. On April 14, the department filed a complaint against Lukas Machine Inc., Lukas-Jones and others, alleging that they had violated the Employee Retirement Income Security Act between April 2008 and October 2011, causing more than $41,000 in losses to the 401(k) plan. The department's suit seeks to recover those losses by taking an offset from Lukas-Jones' plan account.

"Employees expect to have their 401(k) contributions made to their plan — and they should," said Jean Ackerman, regional director of the Employee Benefits Security Administration's San Francisco Regional Office, which investigated the case. "When a plan fiduciary breaches his duty to the plan's participants, the department will do everything possible to protect the employees' funds."

The department's suit alleges that the defendants failed to remit at least $32,725 in withheld employee contributions and at least $8,563 in withheld loan repayments to the plan. The department further alleges that the defendant's actions caused lost opportunity earnings for the plan participants. The suit seeks to restore unremitted employee contributions, participant loan repayments and associated lost opportunity earnings for the Lukas Machine Inc. 401(k) plan.

Immediately before filing the complaint, investigators learned that Lukas-Jones had requested a rollover withdrawal of her entire plan account balance. In response, the department filed a motion for a temporary restraining order and preliminary injunction to freeze those assets.

In the complaint, the department asks the court to require the defendants to restore to the plan all losses incurred because of the alleged breaches and violations of their fiduciary duties under ERISA, including lost opportunity earnings. The court has granted the department's motion to enjoin the defendants from withdrawing funds from the plan accounts at Massachusetts Mutual Life Insurance Co. until a hearing is held on April 29 for the court to determine whether Lukas-Jones' plan account should continue to be frozen until ERISA violations have been adjudicated.

The case is being litigated by the department's Regional Solicitor's Office in Seattle.

EBSA protects the retirement, health and other workplace-related benefits of America's workers, retirees and their families. The agency oversees approximately 701,000 private sector retirement plans, 2.3 million health plans and other plans that provide benefits to more than 141 million Americans. Collectively, these plans hold more than $7.3 trillion in assets. For additional information, visit http://www.dol.gov/ebsa/. Employers and workers can contact EBSA's Seattle District Office at 206-757-6781 or toll-free at 866-444-3272 for help with problems relating to private sector retirement and health plans.

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Civil Action Numbers: 14-cv-555; 1:14-cv-00555
Perez v. Lukas Machine Inc., Lukas Machine Inc. 401(k) Profit Sharing Plan and Trust, Brenda Lukas-Jones, an individual, and Massachusetts Mutual Life Insurance Co., a Massachusetts corporation