US Labor Department secures judgment ordering fiduciaries of Connecticut, SIMPLE IRA plan to restore nearly $21k in withheld contributions

Date of Action: Sept. 9, 2015

Type of Action: Consent Judgment and Order

Defendants: American Materials Corp. and Donald J. Bercowetz

Allegations: The American Materials Corp. SIMPLE IRA Plan was established to provide retirement benefits for employees of American Materials Corp. a Bloomfield, Connecticut, landscape and construction materials company, and their beneficiaries. The plan was funded by amounts withheld from employees' paychecks and forwarded to the plan by its fiduciaries. The company was the plan's sponsor and administrator. Donald J. Bercowetz, the company's president, was the plan's sole decision maker. As such, they are fiduciaries under the Employee Retirement Income Security Act and were responsible for ensuring the timely forwarding of employee contributions to the plan.

An investigation by the U.S. Department of Labor's Employee Benefits Security Administration found that the defendants violated their fiduciary duties under ERISA between January 2008 and January 2012 when they failed to remit any and all withheld contributions to the plan and instead used the unremitted plan assets for their own uses. The Labor Department filed suit against the defendants in federal court on July 6, 2015.

Resolution: The department has obtained a consent judgment ordering the defendants to restore $20,939 plus interest to the accounts of the affected plan participants; payments to be made in 24 monthly installments of at least $872.45. The defendants are also enjoined from future ERISA violations and Donald J. Bercowetz is permanently enjoined from again serving as a fiduciary to an ERISA-covered plan. The suit was litigated for the department by its Regional Office of the Solicitor in Boston.

Quote: "Fiduciaries' duties are clear. Their obligation is to the plan and its participants, not to themselves. Failing to forward withheld contributions to the plan and using those monies for one's own use are clear violations. The defendants' actions will now be corrected but they should never have occurred in the first place," said Susan Hensley, EBSA's regional director in Boston.

Court: U.S. District Court for the District of Connecticut

Civil Action Number: 3:15-cv-01023-MPS.