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Release Date:10/23/1998
Release Number: NY
208
Contact Name: Rita Ford
Phone Number: 202.219.8921 |
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The U. S. Department of Labor has obtained a
consent judgment requiring Hull Corp. and a trustee of its employee stock
ownership plan (ESOP) to pay $541,667 in restitution to the plan and to pay
civil monetary penalties to the federal government for violating federal
pension law. |
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Money restored to the plan will be allocated to
the accounts of all plan participants except defendant John E. Hull, who was a
plan trustee and director of the company. Besides the restitution, the
defendants were ordered to pay an additional penalty of 20 percent of the
amount of any improper transactions with the plan. The judgment also
permanently bars Hull Corp. and Hull from serving as fiduciaries to any plan
governed by the Employee Retirement Income Security Act (ERISA). |
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The ESOP was established Jan. 1, 1991 and contains
three components: a fixed contribution portion, variable contribution component
and 401(k) plan. Both the fixed and variable components are designed to invest
primarily in the stock of the Hull Corp. |
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In a lawsuit filed simultaneously with the
judgment, the Labor Department alleged that the corporation and its board of
directors voted to transfer assets of a corporate retirement plan to the ESOP.
The board of directors then approved an agreement under which the
ESOP purchased 40,000 shares of Hull Corp. capital stock for more than $2
million. |
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According to the lawsuit, the defendants violated
ERISA by executing the transactions to benefit the Hull Corp. and its
shareholders and by failing to conduct an independent, good faith analysis and
not retaining an independent trustee to advise them about the prudence of
converting the retirement plan into the ESOP. Furthermore, the lawsuit alleges
that the ESOP paid more than fair market value to purchase the corporate
stock. |
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This case resulted from an investigation by
the Boston Regional Office of the Pension and Welfare Benefits Administration.
The consent judgment was entered in the federal district court in Syracuse on
October 19. |
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Herman v. The Hull Corporation
Civil
Action No. 98-CV-1616 |
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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 202.693.7775. |
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