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Release Date: 09/26/2002
Release Number: 02-186
Contact Name: Sharon Morrissey
Phone Number: 202.693.8664
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Covington, Kentucky - A lawsuit filed in federal
district court here by the U.S. Department of Labor’s against the Dayton,
Kentucky-based RADAC Corp. and company officials has been resolved in the
department’s favor. Defendants have agreed to pay $100,000 on a pro rata
basis to 129 former participants and beneficiaries of the company’s Employee
Stock Ownership Plan (ESOP) who received distributions and did not retain their
RADAC stock in December 1994. |
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RADAC and the individual defendants have provided
documentation reflecting the deposit of the $100,000 into an escrow account and
have agreed to distribute the funds to the affected parties within 120 days of
the court’s order, which was entered on September 10. |
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“This action demonstrates our commitment to protect
the hard-earned benefits of American workers," said Joseph Menez, director of
the department’s Cincinnati regional office of the Pension and Welfare
Benefits Administration, which investigated the alleged violations of the
Employee Retirement Income Security Act (ERISA). |
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According to the department’s suit, RADAC Corp. and
company officials terminated the ESOP and distributed plan assets to
participants other than themselves using an independent appraisal that allegedly
valued RADAC stock held by the plan at less than its fair market value. |
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Besides RADAC Corp., individual defendants were
Richard L. Morris, president and chief executive officer of RADAC and chairman
of its board of directors, and corporate officers and directors Joseph C. Von
Lehman, Jr., James E. Cornwell and H. Thomas Smith, who is now retired from the
company. Morris served as the plan’s administrator. |
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The department’s lawsuit alleged that the
defendants violated their fiduciary duties to the plan and committed a
prohibited transaction under ERISA when RADAC Corp. repurchased the plan’s
employer stock from participants and beneficiaries for less than fair market
value upon the termination of the plan. |
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Employers and workers can contact the Cincinnati
regional office at 1.859.578.4680 or EBSA’s Toll-Free Employee & Employer
Hotline number, 1.866.275.7922,
for help with problems relating to private-sector pension and health plans. |
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(Chao v. RADAC Corporation, Richard L. Morris; H.
Thomas Smith; James E. Cornwell, and Joseph C. VonLehman, Jr.
Civil Action No. 2000-52) |
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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. |
