Media Release

Release Date:12/04/1998
Release Number: USDL: 98 - 203
Contact Name:Sharon Morrissey
Phone Number: 202.219.8921

Labor Department Seeks To Have Independent Trustee Named To Liquidate Florida 401(K) Plan

The U.S. Department of Labor filed a lawsuit today to appoint an independent trustee to terminate and distribute the assets of a 401(k) plan sponsored by the Hollywood, Fla.-based Carolina Fitness Equipment, Inc. (CFE).

According to the department’s lawsuit, the plan’s 58 participants have been unable to direct their investments among different options provided under the plan and have had their inquiries to the company and the plan trustees go unanswered. The plan had assets of $349,977 as of June 30, 1996, and, according to the suit, no employer or employee contributions have been made to the plan since July of that year.

The lawsuit also seeks to have the company and the plan’s named fiduciaries, Harvey Miller and Edward B. Beam, Jr., removed from their positions with the plan.

The department’s lawsuit alleges that CFE, incorporated in Charlotte, N.C. in 1983, was purchased by Bio-Dyne North Corporation of Atlanta in February 1994, when the latter relocated CFE’s operations to Hollywood, Fla.

CFE established its 401(k) plan in January 1988 and amended it in June 1994. Named as its trustees are Miller and Beam. The trustees terminated their employment with the firm in July 1996, but did not resign formally as trustees of the plan. Nor did they notify the plan’s third-party administrator or group annuity contractor of their resignations. The company ceased operating Aug. 23, 1996.

CFE also allegedly failed to appoint a trustee to replace Miller and Beam or appoint replacement fiduciaries to operate and administer the plan, which has not been formally terminated.

The lawsuit resulted from an investigation conducted by the Atlanta Regional Office of the department’s Pension and Welfare Benefits Administration (PWBA). It was filed in the federal district court in the Southern District of Florida on Dec. 3 in Ft. Lauderdale.

(Herman v. Carolina Fitness Equipment, Inc., et al)
Civil Action #98-7367-CIV-GOLD

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