Judge orders fiduciary to restore $275K to Nohl Crest Homes Corp. Employee Stock Ownership Plan in Oldsmar, Florida

Date of Action:  Sept. 22, 2014

Type of Action: Consent Judgment

Name(s) of Defendant(s): Nohl Crest Homes Corp., Kenneth R. Emery, Peter G. Tibma, and Nohl Crest Homes Corp. Employee Stock Ownership Plan and Jose Fernandez, Third Party Defendant

Allegations: The complaint filed by the U.S. Department of Labor on May 22, 2013 alleged that on or about Oct. 16, 2007, defendants Nohl Crest Homes Corp., Kenneth R. Emery and Peter G. Tibma caused or allowed a transfer of $650,000 in plan assets to a company bank account to be used for company purposes and obligations rather than for the exclusive benefit of the plan and its participants and beneficiaries. To the extent the $650,000 transfer was for the purchase of company stock, the defendants did not determine, in good faith, the fair market value of the stock or provide a stock certificate reflecting the plan’s ownership of any shares of stock. The defendants also failed to distribute the plan’s remaining assets to participants and beneficiaries in accordance with the plan document. The defendants failed to ensure that the plan was adequately covered by a fidelity bond, and the defendants failed to monitor, control, or attempt to rectify the acts of one another with respect to the plan.

Resolution: The court order indicates that the Labor Department, Tibma, and Jose Fernandez have agreed to resolve all matters in controversy in their respective actions. Specifically, the department alleged that as a result of their fiduciary breaches, the defendants caused the plan losses of $870,946 (which includes the $650,000 transfer of plan assets to the company plus lost earnings). However, for settlement purposes the parties agree that losses to the plan total $700,000 as of April 22, 2014. Tibma filed a cross claim and a third party claim alleging Emery and Fernandez were liable to him for contribution and/or indemnity, and agreed, as part of the settlement, to dismiss his cross claim against Emery without prejudice and his third party claim against Fernandez with prejudice. Furthermore, Tibma agreed to make restitution to the plan in the amount of $275,000 within 20 calendar days of entry of the court’s order by delivering a check to the independent fiduciary. The court order appoints M. Larry Lefoldt, C.P.A. of Lefoldt & Co., P.A. in Ridgeland, Mississippi as the independent fiduciary. Further, the court ordered that defendant Tibma be permanently enjoined and restrained from violating the provisions of Title I of the Employee Retirement Income Security Act and from serving as a fiduciary, trustee, agent, or representative in any capacity to any employee benefit plan.

Court: United States District Court, Middle District of Florida, Tampa Division

Docket Number: 8:13-cv-1360-MSS-AEP

U.S. Department of Labor news 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.