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Release Date:04/06/2001
Release
Number: 01-35-4-6
Contact Name: Gloria Della
Phone Number: 202.219.8921 |
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The U.S. Department of Labor obtained a consent
judgment and order on April 4, 2001 requiring fiduciaries of the profit sharing
plan of Distribution Specialists, Inc. of Houston, Texas, to pay $101,618.38 in
restitution and civil penalties for making improper loans and transfers from
the pension plan to benefit themselves. |
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Distribution Specialists Inc. is a trucking
distribution company located in Houston. The profit sharing plan covered as
many as 37 participants and had assets of $919,583 as of
December 31,
1997. |
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Under the judgment, the profit sharing accounts of
the defendants will be offset by the amount of the restitution and
re-distributed to the accounts of the remaining plan participants. The judgment
also allows Michael O’Connor to remain as the plan trustee in order to
terminate the plan and distribute its assets. O’Connor must provide proof
that the plan’s assets have been distributed to eligible participants. In
the event O’Connor has not distributed all of the plan’s assets by
December 31, 2001, the Labor Department may recommend a successor trustee to
replace him. |
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In a lawsuit filed on July 14, 2000, the
department alleged that the company and Michael J. O’Connor violated the
Employee Retirement Income Security Act (ERISA) when they made a series of
transfers and a loan totaling in excess of $238,000 over the period 1994 to
1998. The department alleged that the unsecured loan has never been fully
repaid and that the series of plan transfers benefited Distribution
Specialists and Michael O’Connor. The department filed an amended
complaint simultaneously with the judgment to add Constance O’Connor and
John Townley, Jr. as defendants because both received income as a result of the
prohibited transactions committed by Michael O’Connor. O’Connor is
the mother of Michael O’Connor and Townley is the vice president of the
company. |
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“Our goal is to assure that consumers know
that the department is only a phone call away to help protect the benefits
promised by employers," said Bruce Ruud, director of the Dallas |
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Regional Office of the Labor Department’s
Pension and Welfare Benefits Administration (PWBA). “Employers and workers
can reach us at 214.767.6831 for help with any problems relating to
private-sector pension and health plans.” |
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The judgment, filed in federal district court in
Houston, resulted from an investigation conducted by the Dallas Regional Office
of PWBA into alleged violations of ERISA. |
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(Chao v. Distribution Specialists, Inc.
Civil
Action No. H-00-2410) |
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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. |
