Perez v. Michael Miles and Leon Stadther involving Miles & Associates Inc. 401(k) Profit Sharing Plan in Charlotte, North Carolina

Date of Action: July 28, 2014

Type of Action: Order of Settlement

Name(s) of Defendant(s): Miles & Associates Inc., Michael Wayne Miles, Leon Victor Stadther, Jr., and Miles & Associates Inc. 401(k) Profit Sharing Plan

Allegations: For payroll periods between Jan. 2, 2008 and Oct. 16, 2012, Wayne Miles and Leon Stadther, withheld employee contributions to the 401(k) plan and participant loan repayments. The defendants failed to segregate these amounts from company assets as soon as they reasonably could and failed to timely forward the funds to the plan in accordance with the Employee Retirement Income Security Act. During the payroll periods that participant contributions and participant loan repayments were not remitted to the plan as required, Miles and Stadther caused or allowed the contributions and participant loan repayments to be comingled with the general assets of the company. The defendants allowed the comingled funds to be used for company purposes and obligations rather than for the exclusive benefit of the plan and the participants. In addition, the company failed to deposit employer matching contributions to the plan associated with the withheld employee contributions for the payroll periods between Jan. 2, 2008 and Oct. 16, 2012. Miles offset funds owed to the plan by using his personal plan account in the amount of $580,956, which includes previously unpaid employee contributions, participant loan repayments, employer contributions and lost earnings owed to the plan prior to the court order.

Resolution: Miles restored the losses to the plan and the court permanently enjoined Miles and Stadther from directly, indirectly, or through any agent, entity or individual from acting as administrators, fiduciaries, trustees, agents, or representatives in any capacity to any employee benefit plan, as defined by ERISA; enjoined them from receiving any compensation, consideration or anything of value from any ERISA covered employee benefit plan and enjoin defendants from engaging in any further action in violation of ERISA; the company will designate a person or persons other than the defendants to act as fiduciaries to the company’s third-party clients in advising them on employee benefit plans, as defined by ERISA.

Court: United States District Court for the Western District of North Carolina Charlotte Division

Docket Number: 3:14-cv-00266

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