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Release Date: 04/02/2001
Release
Number: V-368
Contact Name: Rita Ford
Phone Number: 202.219.8921 |
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The U.S. Department of Labor sued
Sherman-Reynolds, Inc. (SRI), of Chicago, Illinois, and Thomas P. Owens, a trustee
of the 401(k) profit sharing plan on March 30 for allegedly failing to timely
remit employee contributions to the plan's investment account, to collect
outstanding participant loans and to obtain a fidelity bond for the
plan. |
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SRI is a corporation that manufactures custom
sheet metal. The 401(k) profit sharing plan covered nine participants as of
November 10, 1999, and had a total of $774,313.57 in plan assets as of
September 30,
1999. |
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The lawsuit alleges Owens and SRI violated the
Employee Retirement Income Security Act (ERISA) by failing:
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To segregate and timely remit $78,136.48 in employee
contributions to the plan's trust, which he used for SRI's general operating
expenses, and by failing to segregate and remit $647.56 in employee
contributions- both amounts resulted in a total of $1,426.65 in lost
opportunity costs to plan participants
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To make an attempt to collect outstanding loan balances from
plan participants
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To secure a fidelity bond in the minimum amount of 10 percent
of the plan's assets, as required under ERISA.
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At the time of the alleged actions, Owens was
both a trustee of the 401(k) plan and an officer of Sherman-Reynolds, Inc.
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The department's lawsuit seeks to require the
defendants to repay all losses with interest owed to the 401(k) plan and to
offset Owens' plan account to repay the plan and to redistribute the money to
the accounts of all eligible participants, excluding him. It also seeks to
require Owens to correct any prohibited transactions with the plan; to either
secure the appropriate loan repayments to the plan or to liquidate the
collateral pledged by the plan participants who defaulted on the loan; and to
bar Owens permanently from serving as a fiduciary to any ERISA-covered
plan. |
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"Our goal is to ensure that consumers know that
the department is only a phone call away to protect the benefits promised by
employers," said Kenneth Bazar, director of PWBA's Chicago Regional Office.
"Employers and workers can reach us at 312.353.0900 for help with any
problems relating to private-sector pension and health plans." |
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The department's lawsuit resulted from an
investigation by the Chicago Regional Office of the Pension and Welfare
Benefits Administration into violations of ERISA It was filed in the federal
district court in Chicago, Illinois. |
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(Chao v. Sherman-Reynolds
Civil Action No.
01-C-2250) |
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U.S. Department of
Labor news releases are accessible on the Internet. The information in this
news release will be made available in alternate format upon request (large
print, Braille, audio tape or disc) from the Central Office for Assistive
Services and Technology. Please specify which news release when placing your
request. Call 202.693.7773 or TTY 202.693.7775. |
