AND WELFARE BENEFITS ADMINISTRATION US 00-68
San Francisco Office of Public Affairs
|For Immediate Release|
|(206) 553-7620||Wednesday, March 29, 2000|
U.S. LABOR DEPT. REACHES SETTLEMENT WITH AVACON CORPORATION, TRUSTEES FOR PENSION VIOLATIONS
Los Angeles - The U.S. Department of Labor announced today settlement agreements and consent decrees were entered March 23, 2000, by the U.S. District Court for the Central District of California, resolving a suit against Avacon Corporation, a corporation based in Walnut, Cal., and four current and former Avacon officials and pension plan trustees. The Avacon Corporation 401(k) Plan was named for the purpose of affecting relief for the fiduciary duty violations under the Employee Retirement Income Security Act (ERISA).
According to Billy Beaver, Los Angeles regional director of the Pension Welfare Benefits Administration (PWBA), defendants Avacon and Jaycee Kim, Avacons president and plan trustee, admitted liability for violations of ERISA which resulted in losses totaling $56,239 plus interest to the plan.
The department sought full restitution from Avacon, Jaycee Kim, and former plan trustees David Kim, Joseph Garcia, and Rodney Allen for all losses suffered by the plan due to their failure to forward and failure to forward in a timely manner employee contributions to the plan.
Under the terms of the Avacon 401(k) Plan, employees were permitted to make contributions to the plan by designating amounts to be withheld from their paychecks, From April 1, 1994, through August 2, 1996, Avacon withheld money for employee contributions from employees paychecks but failed to forward the contributions to the plan in a timely fashion, the delay ranging from 39 to 228 days. Rather than timely forwarding these contributions, the money remained commingled with the general assets of Avacon, depriving the plan participants of $6,344 in interest. From August 16, 1996, through March 28, 1997, Avacon withheld $38,611 from employees paychecks. These contributions, however, were never forwarded to the plan but were instead commingled with Avacons general assets.
As a result of the settlements, Avacon, Jaycee Kim and David Kim agreed to pay to the plan $56,239 to correct all prohibited transactions and restore all losses attributable to their fiduciary breaches, including interest and lost opportunity costs, Beaver said. Further, Jaycee Kim agreed to resign from his position as plan trustee in favor of an independent fiduciary who will have full discretionary authority to administer the plan.
All defendants agreed to permanent injunctions against serving as fiduciaries of or service providers to any employee benefit plans covered by ERISA.
These settlements resulted from an investigation conducted by the Los Angeles Regional Office of PWBA, headed by Beaver. It is part of an ongoing initiative to insure compliance with ERISA fiduciary standards with respect to the proper deposit of employee contributions to 401(k) retirement plans.
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Note to editors: Civil Action File Number 00-02933 JSL
(Alexis M. Herman, Secretary of Labor, United States Dept. of Labor v. Avacon Corp., et al)
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