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Release Date: 09/17/2002
Release Number: 160
Contact Name: Michael Shimizu
Phone Number: 206.553.7620
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San Francisco, California - The U.S. Department of Labor filed a complaint against Merrill E.
Schmidt DDS, Inc. and the trustee of the Merrill E. Schmidt DDS, Inc., Defined
Benefit Plan for alleged violations of the Employee Retirement Income Security
Act (ERISA). The department is seeking to restore losses to an employee
benefit plan of the company, which was based in Santa Ana, California. |
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Filed September 6, 2002, in the U.S. District Court for the Central District of
California, the suit results from an investigation by the Los Angeles Regional
Office of the department’s Pension and Welfare Benefits Administration (EBSA).
Besides Merrill E. Schmidt DDS, Inc., the complaint names as defendant Merrill
E. Schmidt, who served as trustee of the plan. The company, whose sole
owner was Schmidt, was the plan administrator and the named fiduciary for the
plan. |
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The
plan is a defined benefit plan that provides for employer contributions to
support benefits for eligible employees of Merrill E. Schmidt DDS, Inc. |
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According
to Billy Beaver, Los Angeles regional director of EBSA, the alleged violations
of ERISA occurred when Schmidt authorized the plan to lend $50,000 of the plan
assets to himself on December 31, 1989. No security agreement or promissory
note was executed in connection with the loan but an amortization schedule
stated that the loan was to be paid in full by December 31, 1996, including interest
at 10 percent per annum. As of the date of the complaint, Schmidt had made
one payment of $5,201 to the plan on April 10, 1990. Since that date,
neither the company nor Schmidt have taken any steps to collect the overdue
loan. As of July 31, 2002, the amount owed to the plan was $155,113. |
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In
a consent judgment filed contemporaneously with the complaint, the defendants
will restore the plan’s losses, over time, in the amount of $155,113, plus
interest. Schmidt shall forfeit any interest in the recovery and in the
plan. The defendants are also enjoined from acting as fiduciaries or
service providers of any trust or plan covered by ERISA, and an independent
fiduciary shall be appointed at the expense of the defendants with full
discretionary authority to manage and administer the plan and its assets, and to
undertake the orderly termination of the plan. |
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(Chao
v. Merrill E.
Schmidt D.D.S. Inc., Merrill E. Schmidt, Merrill E. Schmidt D.D.S., Inc.,
Defined Benefit Plan
Civil Action No. SA02-850AHS) |
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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 202.693.7755. |
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