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Release Date: 03/20/2002
Release Number: 47
Contact Name: Tino Serrano
Phone Number: 415.975.4742
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San Francisco, California - An East Bay business owner has agreed to
restore nearly $34,000 in outstanding employee contributions and lost interest
to his company’s 401(k) employee benefit plan. Under the terms of a
consent judgment entered in U.S. District Court in San Francisco March 14, James
C. Long, of Livermore, will repay $33,818.37 in employee contributions to the
plan.
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Participants in the affected plan worked for Discovery Ventures,
Inc., doing business as Baking Machines, Inc. Forty-eight employees
contributed to the plan since it was formed in January 1996.
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A Labor Department investigation revealed that Long, who served
as the plan’s trustee and fiduciary as well as company president, failed to
forward employee contributions in a timely manner during the last two quarters
of 2000 and failed to forward some or all contributions from that point until
the companies closed in May 2001. Employee contributions withheld from biweekly
paychecks should have been deposited to the plan account promptly.
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The federal complaint alleges that instead of forwarding these
contributions promptly to the plan, Long retained the contributions, commingled
them in the company’s general accounts, and used the funds to meet corporate
debts when the company’s cash flow was insufficient.
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“These were not company funds that could be used to cover
other company debts. This was money deducted from employee earnings to be held
for them in trust as a benefit,” said Bette Briggs, regional administrator for
the Pension and Welfare Benefit Administration in San Francisco, which
investigated the case. Briggs said the Labor Department is working with Long to
fully restore the employees’ contributions, plus lost earnings, to the plan.
The full amount will be distributed to the plan participants.
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As part of the agreement, Long will be permanently barred from
serving as a fiduciary or service provider for any employee benefit plan covered
by ERISA.
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(Chao v. James C. Long and Baking Machines
401(k) Profit Sharing Plan
Civil Action No. C 02-1029 PJH)
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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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