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Release Date: 02/29/1998
Release Number:
USDL:-32
Contact Name: GLORIA DELLA
Phone Number: 202.219.8921
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The U. S. Department of Labor has sued Mobile
Medical Diagnostics, Inc. of Los Angeles and its pension plan trustees for more
than $245,000 in improper plan transfers to benefit the company and for failing
to collect employer contributions owed to the money purchase plan. |
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Mobile Med sponsored two pension plans — a
money purchase plan and a profit sharing plan — which covered up to 17
participants. The money purchase plan was merged into the profit sharing plan
in 1993. This successor profit sharing plan had assets of $335,735 as of Nov.
30, 1996. |
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The Labor Department lawsuit alleges that the
company and trustees Stanley Shapiro and Michael Cohn caused the profit sharing
plan to sustain losses on transactions between the plans and Mobile Med over
the period July 1992 and August 1994. Shapiro and Cohn — who held the dual
positions of plan trustees and owners of Mobile Med — represented the
interests of both the plans as lenders and the company as borrower in making
the plan transfers. |
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The lawsuit alleges that the defendants violated
the Employee Retirement Income Security Act (ERISA) when:
- Shapiro made a series of improper transfers totaling $248,138
from the plans to Mobile Med without investigating alternative investments and
without obtaining security for the transfers;
Shapiro failed to collect employer contributions of
$54,128 owed to the money purchase plan, of which $19,128 in outstanding
contributions was still owed to the profit sharing plan after the plans were
merged;
- Shapiro and Cohn failed to keep detailed records on all plan
investments, receipts and disbursements; and
- Cohn knowingly participated in or failed to correct the
improper plan transactions committed by Shapiro.
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Mobile Med allegedly failed to monitor the actions
of Shapiro and shares liability for any losses to the profit sharing
plan. |
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The lawsuit seeks a court order to require that
the defendants restore all losses with interest to the profit sharing plan, to
appoint an independent trustee to manage the plan and to permanently bar the
trustees from serving in any position of trust to plans governed by ERISA. It
also asks the court to require that the trustees cooperate with the independent
trustee by turning over all plan books and records. |
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The court action was filed on Feb. 5 in federal
district court in Los Angeles. The case was investigated by the Los Angeles
Regional Office of the department’s Pension and Welfare Benefits
Administration into alleged violations of ERISA. |
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(Herman v. Mobile Medical Diagnostics, Inc.)
Civil Action No. CV-98-0911 |
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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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