|
 Printer Friendly Version
Release Date: August 27, 2007
Release Number: 07-870-PHI
Contact Name: Gloria Della/Richard Manning
Phone Number: 202.693.8664/202.693.4676
Philadelphia – The U.S. Department of Labor
has obtained a judgment ordering a former executive of bankrupt Standard
Automotive Corp., Hillsborough Township, New Jersey and former trustees
of the company’s 401(k) plan to pay $340,000 in restitution to the
plan.
The department sued defendants Anthony L. Scialabba,
Morton Batt and John E. Elliot for alleged misuse of plan assets to pay
Scialabba’s law firm for legal services that were improper,
unnecessary and unreasonably costly. Scialabba, who was a plan trustee,
allegedly approved a significant portion of the plan’s payment for
legal services provided by his firm at various times from September 2001
to July 2003 without the approval of the corporation’s board of
directors. After Scialabba resigned in December 2003, trustee Batt
approved payment of additional improper fees to Scialabba’s law firm
and retained the firm as special counsel to the plan. Former board of
directors chairman Elliott authorized the hiring of Scialabba and then
Batt to be trustees of the plan.
In related private litigation, Scialabba and
Citistreet Inc. agreed to pay an additional $301,000 to the plan. A
further $37,500 was restored to the plan from an escrow account at
Scialabba’s law firm. In addition to the monetary restitution,
Scialabba and Batt are permanently enjoined from generally serving as
fiduciaries to employee benefit plans governed by the Employee
Retirement Income Security Act. In November 2006, Jacqueline Carmichael
was appointed as the plan’s independent fiduciary, with authority to
terminate the plan and distribute its assets to participants.
“The Labor Department’s legal action restores to
the workers of Standard Automotive the retirement benefits to which they
are entitled,” said Bradford P. Campbell, assistant secretary of the
department’s Employee Benefits Security Administration (EBSA). “Protecting
workers’ benefits is a top priority for this administration.”
The corporation, a holding company for manufacturers
of components for the trucking and aerospace industries, filed for
bankruptcy in March 2002. As of January 2005, the plan had $2,520,316 in
assets.
The case was investigated by EBSA’s New York
Regional Office. Employers and workers can reach the New York office at
212.607.8600 or toll-free at 1.866.444.EBSA (3272) for help with
problems relating to private sector retirement and health plans.
Chao v. Scialabba
Civil Action Number 1:05-cv-3732
U.S. Department of Labor news releases are accessible on the
Department's Newsroom
page. The information in this news release will be made available
in alternate format upon request (large print, Braille, audio tape or
disc) from the COAST office. Please specify which news release when
placing your request at 202.693.7828 or TTY 202.693.7755. The U.S.
Department of Labor is committed to providing America's employers and
employees with easy access to understandable information on how to comply
with its laws and regulations. For more information, please visit the
Department's Compliance
Assistance page.
|
