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Release Date: 11/12/1998
Release Number:
V-305
Contact Name: RITA FORD
Phone Number:202.219.8921
Contact
Name: JOSEPH MENEZ
Phone Number: 606.578.4680 |
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The U.S. Department of Labor filed a lawsuit against the owner and
trustees of Building Services Unlimited, Inc., in Louisville, Ky., for failing
to make requested contributions to the company’s retirement plan and
paying more than fair market value for the stock contributed to the employee
stock ownership plan. |
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Named in the lawsuit were Maxine Mount, the company’s
president and trustee of the Building Services Unlimited, Inc.
Contractor’s and Employees’ Retirement Plan (Retirement Plan) and
Employee Stock Ownership Plan (ESOP); Stock Yards Bank of Louiville, Ky.,
successor trustee of the ESOP; and the company Building Services Unlimited,
Inc. |
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The company was a government contractor providing janitorial and
maintenance services for the Internal Revenue Service, Defense Logistics Agency
and the Naval Ordnance Station in Ohio and Kentucky. The Retirement Plan was
started in 1989 as a money purchase pension plan for the employees’
benefit, and the company contributed prescribed amounts on behalf of each
employee working under the contracts for each hour worked. On Aug. 19, 1993, it
had 284 participants and assets valued at $293,090. |
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The ESOP, created on Dec. 31, 1992, had 262 participants and
assets valued at $56,413 at the end of 1995. |
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The lawsuit alleged that Mount, who now reside in Panama, Fla.,
retroactively amended the Retirement Plan in December 1992 to terminate the
plan and to cease accrual of benefits retroactively to June 30, 1992. This
action was prohibited by the Employee Retirement Income Security Act (ERISA).
The law also prohibits adoption of amendments to reduce the rate of future
benefits accruals without giving written notice to the participants. |
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In March, 1993, Mount, the ESOP trustee, and Stock Yards Bank made
the ESOP a party to a $1,350,000 promissory note whereby the ESOP would make
120 monthly installment payments to Mount in exchange for 30 percent of the
company’s outstanding common stock. The ESOP made monthly installment
payments to Maxine Mount until October 1994 totaling $290,114. |
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The lawsuit alleged that Mount failed to disclose relevant
information about the company’s future business prospects and Stock Yards
Bank failed to adequately investigate the fair market value of the company
stock. |
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In addition, Stock Yards Bank was alleged to have caused the ESOP
to purchase shares of company stock at a price that was substantially above the
fair market value. The company stock is considered worthless. |
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The lawsuit seeks to permanently bar Mount from serving in a
position of trust with respect to any plan governed by ERISA; place an
injunction against future violations by both defendants; appoint a substitute
trustee to administer the plans; and asks that all losses plus interest be
restored to the Retirement Plan and to the ESOP. |
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The lawsuit is the result of an investigation by the Cincinnati
Regional Office of the Pension and Welfare Benefits Administration into
violations of ERISA. It was filed Nov. 12 in the federal district count in
Louisville, Ky. |
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Herman v. Building Services Unlimited, Inc.
Civil Action No.:
3:98CV700C |
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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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