US Labor Department sues Los Angeles-based Storms & Lowe Associates Inc. and its owners to restore 401 (k) plan assets

Date of action: August 6, 2015

Type of action: Complaint

Name of defendants: Storms & Lowe Associates Inc.; James R. Manning; Roger Aguilera; and the Storms & Lowe 401 (k) Plan

Allegations: Based on an investigation conducted by the U.S. Department of Labor’s Employee Benefits Security Administration, the department has filed a complaint alleging that the fiduciaries of the Storms & Lowe 401(k) Plan violated the Employee Retirement Income Security Act (ERISA) when they improperly withdrew more than $166,000 in plan assets and when they also improperly withheld  more than $64,000 in employee contributions and participant loan payments from employees’ pay and failed to timely remit them to the plan.

Specifically, the complaint alleges that fiduciaries Storms & Lowe Associates Inc., and owners Roger Aguilera and James Manning, engaged in self-dealing and improperly withdrew $166,395 in plan assets and used them for non-plan purposes. On or about June 2012, the plan’s fiduciaries improperly authorized the plan’s trust custodian to wire all funds in the amount of $166,395 from the plan’s account to a company account. Two corporate checks totaling $166,395 were subsequently issued directly to Aguilera and Manning. More than $123,000 has neither been restored to the plan by the fiduciaries nor paid to plan participants.

According to the lawsuit, the fiduciaries of the Los Angeles-based mechanical, electrical and plumbing consulting engineering services corporation also failed to timely remit approximately $55,000 in employee contributions and $9,700 in participant loan payments to the plan from January 2008 through at least October 2008. Instead, they allowed the funds to commingle with the general assets of the company. To date, over $41,000 in employee contributions and loan repayments have neither been repaid to participants nor restored to the 401(k) plan.

Resolution: The department is asking the court to order Storms & Lowe Associates Inc., James R. Manning, and Roger Aguilera to restore any losses to the plan resulting from their fiduciary breaches, including lost opportunity costs, and to correct the prohibited transactions. The department also seeks a permanent injunction barring Aguilera and Manning from serving as fiduciaries or service providers of any plan covered by ERISA. The fiduciaries have already agreed to appoint and pay for an independent fiduciary to collect and distribute plan assets, terminate the plan, and conclude any plan related matters.

Court: United States District Court for the Central District of California

Docket Number: 5:15-cv-05960

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