U.S. Labor Department secures consent judgment against fiduciaries in Lakewood, Washington, who took money from pension plan for personal use

Date of Action: May 21, 2015

Type of Action: Consent Judgment and Order

Names of Defendants: Alfred H. Chan M.D., P.C.; Alfred H. Chan; Judy H. Chan; and the Alfred H. Chan M.D., P.C. Defined Benefit Plan & Trust

Allegations: An investigation by the U.S. Department of Labor's Employee Benefits Security Administration found that Alfred and Judy Chan, the fiduciaries of a pension benefit plan for the employees of their Lakewood, Washington medical corporation, violated their fiduciary duties to administer the plan prudently and solely on behalf of its participants. The Chans relocated to Taiwan in February 2011 shortly before an impending indictment for Medicare Fraud. Once in Taiwan, Alfred and Judy Chan did not appoint an administrator of the plan in their absence, did not file mandatory reports about the plan, and did not give their former employees the pension benefits owe to them. Instead, the complaint alleges, the Chans used the pension plan's assets to pay for personal debts, personal legal fees and other personal, non-plan expenses and investments.

Specifically, the complaint alleged Judy Chan invested $200,000 of the pension assets in Facebook Stock LLC under a different name to repay a debt. She also took more than $100,000 of the plan assets to pay for personal legal fees, and failed to deposit $31,137 of plan assets into the pension plan's accounts.

Resolution: On May 21, 2015, the court approved a consent judgment permanently enjoining the defendants from causing any assets to be removed from any account or limited liability company held in the plan's name. The court has ordered that upon the appointment of an independent fiduciary selected by EBSA, the defendants shall be removed as fiduciaries to the plan and the Chans permanently enjoined from serving as fiduciary or service provider to any employee benefit plan subject to ERISA. The court also orders that Alfred and Judy Chan shall not recover any amount from the plan unless and until the rest of the participants receive the distributions owed to them in full, which is more than $400,000.

Court: United States District Court, Western District of Washington

Docket Number: 2:15-cv-538-RAJ