More than $66,000 to be restored to AAR Inc. 401(k) Plan in Newark, California, under consent judgment obtained by US Labor Department

Date of Action:  Oct. 28, 2014

Type of Action: Consent Judgment and Order

Names of Defendants: All American Rentals Inc., Michael Carter, and the AAR Inc. 401(k) Plan

Allegations: Based on an investigation by the U.S. Department of Labor’s Employee Benefits Security Administration, the department filed a complaint on May 30, 2012 alleging that, between May 2008 and July 2011, the defendants withheld more than $143,000 from employees’ paychecks but failed to remit those amounts to the 401(k) plan’s trust account. In addition, the defendants were supposed to make nearly $74,000 in employer contributions to the plan, but failed to do so.

Resolution: The court-approved consent judgment and order acknowledges that the defendants have restored a portion of the missing funds. It also requires the defendants to restore the remaining $66,091 still owed to the plan, plus interest. In addition, the judgment removes Carter as the plan’s fiduciary, appoints Receivership Management Inc. as the independent fiduciary to the plan, and requires Carter to pay Receivership Management’s fees. Carter will be assessed a 20 percent civil penalty on the amounts he restores to the 401(k) plan. He is also permanently enjoined from serving as a fiduciary of, or service provider to, any ERISA-covered employee benefit plan in the future.

Court: United States District Court, Northern District of California, San Francisco Division

Docket Number: 3:12-cv-02758-JST

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