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Release Date: 05/09/2003
Release Number: KC-EBSA-06
Contact Name: Sharon Morrissey
Phone Number: 202.693.8664
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Kansas City, Missouri - The U.S. Department of
Labor obtained a consent judgment on May 7 ordering the president of
bankrupt West Des Moines based-Spain Electric, Inc. to repay $32,174.54 to
the company’s pension and health plans for failing to forward to the
plans contributions withheld from employees’ wages. |
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Under the judgment, Daniel P. Spain, the plans’
fiduciary, also was permanently barred from dealing with any retirement or
welfare plan covered by the Employee Retirement Income Security Act (ERISA).
He agreed to repay $3,940 directly to specific individuals in the health
plan. The judgment also ordered Spain to use $28,233.82 from his
individual account balance in the 401(k) plan to repay the losses of other
plan participants. |
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Spain failed to segregate employees’ 401(k) plan
contributions from the company’s general operating assets during the
period of March 7, 2001 to June 20, 2001. From October 1, 2001 to February
2002, health plan deductions were not forwarded for payment of the
insurance premiums causing the insurance company to cancel coverage. |
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“Despite the financial hardships of employers, the
law clearly protects employee contributions by requiring that they be
forwarded to plans for holding in trust to pay promised benefits. The
outcome of this case should make these plans whole,” said Gregory Egan,
director of the department’s Kansas City Regional Office of the Employee
Benefits Security Administration (EBSA), which investigated the case. |
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The retirement plan had 52 participants and assets
totaling $384,355.07 as of December 31, 2001. Employees of Ganoe Electric,
which Spain and his wife bought in 1997, also were covered by the plans.
The original lawsuit was filed on January 16, 2003 in federal district
court in the southern district of Iowa in Des Moines. |
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Egan noted that employers with similar problems, who
are not yet the subject of an investigation by EBSA, may be eligible to
participate in the department’s Voluntary Fiduciary Correction Program (VFCP).
Participation in the VFCP requires employers to make workers whole, but
allows them to avoid EBSA enforcement actions and civil penalties, as well
as any applicable excise taxes. For more information about the VFCP see
www.dol.gov/ebsa. |
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Employers and workers with questions or concerns
regarding their private-sector pension and health plans can contact the
EBSA regional office in Kansas City for help at 816.426.5131 or EBSA’s
toll free number, 1.866.444.EBSA (3272). |
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(Chao v. Daniel P. Spain)
Civil Action No. 4:03-CV-90021 |
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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. |
