US Department of Labor files lawsuit to recover retirement plan assets for 19 participants of Kesco Southeast Inc. in Cartersville, Georgia

Date of Action:  May 02, 2016

Type of Action: Complaint

Name of Defendants: Kesco Southeast Inc., Dean Conn, Andrea Rozelle, and Kesco Southeast Inc. 401(k) Plan

Allegations: Kesco Southeast Inc., which specialized in rock drilling and blasting, ceased operations in May 2011. Kesco was both the plan administrator and the plan sponsor. Dean Conn was the president and sole owner of the company and Andrea Rozelle was the corporate secretary. Both individuals were fiduciaries to the Kesco Southeast Inc. 401(k) Plan. In May 2013, Rozelle authorized the plan’s fund custodian to make lump sum distributions of all plan assets with two checks. The first check was for the benefit of an individual participant in the amount of $14,545.83. The check was signed by the participant and deposited into his account. The second check was the remaining balance in the plan account totally $20,228.36. The second check was made payable to the company and deposited into an account belonging to and controlled by Conn. As a result, the plan’s assets have been depleted, and the plan is unable to make distributions to the remaining 19 participants with outstanding balances in the plan, excluding Rozelle.  

Resolution: The department is seeking the defendants be enjoined from engaging in any further violations of the Employee Retirement Income Security Act; permanently enjoined from serving as a fiduciary or employee of any employee benefit plan subject to ERISA. Additionally, the department seeks the appointment of an independent fiduciary at the defendants’ expense for the purpose of terminating the plan and distributing its assets to plan participants. Lastly, the department requests for the defendants to disgorge all profits received as a result of their fiduciary breaches, restore to the plan all losses, including interest or lost opportunity costs, award the plaintiff the costs of this action, and provide such other relief as may be just and equitable.                                                     

Court: United States District Court, Northern District of Georgia, Rome Division

Docket Number: 4:16-cv-00115-HLM