|
Los Angeles - The U.S. Department of Labor
announced today it filed suit July 8, 1999, in the U.S. District Court for the
Central District of California against two Los Angeles corporations; their
president and majority shareholder; the companies’ pension plan; and the
pension plan’s trustees for breach of fiduciary duties under the Employee
Retirement Income Security Act (ERISA).
Named as defendants were Enhance Memory Products,
Inc. and Enhance 3000, Inc., both corporations; Uri Nemet, president of the
corporations; Enhance Memory Products, Inc. Target Benefit Pension Plan, an
employee pension benefit plan; and Idit Nemet, who with Uri Nemet, served as
trustee of the Plan.
According to David Ganz, Los Angeles regional
director for the Department of Labor’s Pension and Welfare Benefits
Administration (PWBA), the suit seeks full restitution from the defendants for
all losses to the Plan due to their alleged fiduciary breaches, including lost
interest and lost opportunity costs.
Between November 1992 and October 1995, Uri Nemet
allegedly transferred money out of the Plan bank account with checks made out
to EMPI, “cash” or to himself in an amount totaling $295,000. EMPI
later made seven repayments totaling $295,000 to the Plan; however, the Plan
received no interest on these amounts.
On February 6, 1996, Uri Nemet transferred
$125,000 from the Plan’s bank account to EMPI. The complaint asserts that
the Plan has received no principal or interest payment on this transfer.
Furthermore, none of the assets of the Plan were held in income-producing
accounts.
In addition, under the terms of the Plan, EMPI was
required to pay contributions to the Plan in an amount necessary to provide
participants with a defined monthly pension at retirement. For the Plan years
ending Jan. 31, 1995, EMPI filed documents with the Internal Revenue Service
and the Labor Department stating that it made a contribution of $48,878 to the
Plan. According to the department, this contribution has never been received by
the Plan.
Also, EMPI was required to make an employer
contribution to the Plan in the amount of $49,906 for the Plan year ending
January 31, 1996. EMPI has failed to make this contribution, the department
further alleged.
The suit asks the Court to require the defendants
to restore all losses, attributable to the fiduciary breaches, including lost
interest and lost opportunity costs; to require the Plan to set off the
Nemets’ individual Plan accounts against the losses caused by their
alleged misconduct; to permanently forbid defendants Uri Nemet and Idit Nemet
from serving as fiduciaries of or service providers to any employee benefit
plan covered by ERISA; and to appoint an independ ent plan trustee for the Plan
with full discretionary authority and power to manage and administer the Plan
and its assets.
Today’s court action resulted from an
investigation conducted by the Los Angeles Regional Office of PWBA, headed by
Ganz.
Note to editors: Civil Action File Number 99-07029
RAP (RNBx)
____________________________________________________________________________________________________________________
|
