U.S. Department of Labor files suit to restore losses to Indianapolis-based AIT Laboratories Employee Stock Ownership Plan

Date of Action: Aug. 29, 2014

Type of Action: Complaint

Names of Defendant: Perez v. PBI Bank Inc., Michael A. Evans, and AIT Laboratories Employee Stock Ownership Plan

Allegations: The suit alleges that the Plan’s trustee, PBI Bank Inc. and the plan sponsor’s Chief Executive Officer, Dr. Michael A. Evans, authorized the purchase of company stock for $90 million, an amount far higher than the stock’s fair market value. 

An investigation by EBSA’s Cincinnati Regional Office determined that the defendants violated the Employee Retirement Income Security Act in June 2009 by causing the plan to pay too much for stock in AIT Holding Company Inc., the parent company of AIT Laboratories. AIT Holding Company is the plan administrator and plan sponsor of the ESOP.  The lawsuit also alleges that Dr. Evans was unjustly enriched at the expense of the ESOP.

The complaint alleges that PBI Bank, Inc. and Evans caused the plan to pay too much by, among other things, ignoring a prior valuation of the company performed for AIT's officers for tax purposes that valued the company at less than $7 million, causing the ESOP to pay a "control" price even though Evans retained control over AIT's Board of Directors even after the purchase, and relying upon inflated projections of the company's future growth, profits and capital expenditures while ignoring the well-known risks that competition and government cost-cutting measures could drive down future growth and profits.

AIT Holding Company Inc. primarily provides pharmaceutical drug identification and quantification services for medical, clinical and forensic purposes. As of Dec. 31, 2012, the AIT Laboratories Employee Stock Ownership Plan had 306 participants.

Resolution: The suit seeks to require PBI Bank Inc. and Evans to restore all losses suffered by the ESOP, plus interest, and to require Evans to return to the ESOP the amount by which he was unjustly enriched.

Court: United States District Court, South District of Indiana, Indianapolis

Docket Number: 1:14-cv-01429-SEB-MJD

EBSA protects the retirement, health and other workplace-related benefits of America’s workers, retirees and their families. The agency oversees approximately 684,000 active private sector retirement plans, 2.4 million health plans and other plans that provide benefits to more than 141 million Americans. Collectively, these plans hold more than $7.6 trillion in assets. Additional information can be found at dol.gov/ebsa.

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.