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Release Date: 10/04/2002
Release Number: 163
Contact Name: Michael Shimizu
Phone Number: 206.553.7620
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San Francisco, California - The U.S. Department of Labor filed suit
September 20, 2002, against
Southprint International, LLC (Southprint), an Arizona company that is currently
in Chapter 7 bankruptcy, for alleged violations of the Employee Retirement
Income Security Act (ERISA). The department is seeking to restore losses
to an employee benefit plan that was based in Tempe, Arizona. |
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Filed
in U.S. District Court for the District of Arizona, the suit results from an
investigation by the Los Angeles regional office of the department’s Pension
and Welfare Benefits Administration (EBSA). Besides Southprint, the suit
names as defendants Bruce Waldersen, president of Southprint, and the Southprint
International 401(k) Profit Sharing Plan. Waldersen also served as the
plan’s trustee. |
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According
to Billy Beaver, Los Angeles regional director for the EBSA, the alleged
violations of ERISA occurred when Southprint and Waldersen failed to forward
employee contributions and loan repayments withheld from employees’ paychecks
to the plan. |
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The
plan is a defined contribution plan funded by a combination of employee
contributions, discretionary employer matching contributions and discretionary
employer contributions. Plan contributions were to be forwarded to Benefit
Services Corporation, the plan’s third party administrator. The
department alleges that from April 10, 1998, through June 2, 2000, employee
contributions and loan repayments totaling $172,465 were withheld from
participant paychecks. However, only $138,897 was remitted to the plan. |
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The
suit asks the court to require the defendants to restore all losses suffered by
the plan, including lost opportunity income. The department is also asking
the court to remove the defendants from their positions of trust with the plan
and to appoint an independent fiduciary to manage and administer it. Associated
costs are to be paid by the defendants, who must cooperate with the independent
fiduciary. |
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Additionally,
the suit asks the court to permanently enjoin the defendants from serving as
fiduciaries of or service providers to any employee benefit plan covered by
Title 1 of ERISA, and to award the Secretary of Labor costs of the civil action. |
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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
restore all losses to the plan, without EBSA enforcement actions and civil
penalties, as well as applicable excise taxes. For more information about
the VFCP see www.dol.gov/ebsa. |
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Today’s
court action is part of an ongoing initiative to insure compliance with ERISA
fiduciary standards with respect to timely deposit of employees’ contributions
to 401(k) plans. |
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(Chao
v. Gateway Data Sciences Corporation
Bankruptcy Action File No. 0001560 PHX RGM
Civil
Action File No. CIV 02-1853 PHX SRB)
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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. |
