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Release Date: 10/16/2003
Release Number: ATL 03-260
Contact Name: Sharon Morrissey
Phone Number: 202.693.8664
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Atlanta, Georgia - The Gary M. Hochberg CLU
Insurance Agency of Hollywood, Florida, and the trustee of its defined
benefit plan were sued by the U.S. Department of Labor on October 7, 2003,
for self-dealing and mismanaging the plan. |
Gary
M. Hochberg is the plan’s trustee, sole owner, director and officer of
the insurance agency. The suit alleges Hochberg failed to account for plan
contributions, plan investment earnings and losses and plan expenses as
early as 1992. He also failed to maintain and account for funds in the
auxiliary investment fund, to monitor the fair market value of plan
assets, excluded eligible employees from coverage by the plan and failed
to pay or underpaid benefits to some participants. In 1999, the defendant
paid some retirees benefits at 26.952 percent of annual salary even though
the plan benefit formula provided for payments to participants at 76.94 of
annual salary. |
Hochberg
also allegedly transferred $27,500 in plan assets to himself in 1994 and
$27,620 to Designer Wear, Inc. (DWI) in 1994 and 1996. These loans or
extensions of credit, which remain unpaid to date, are considered
prohibited transactions in violation of the Employee Retirement Income
Security Act (ERISA). |
The
plan is a defined benefit plan funded by the company with universal life
insurance policies, annuities and an auxiliary investment fund, which is
managed and invested solely by Hochberg. The plan provides for the payment
of benefits at normal retirement, death, disability and termination of
employment. The plan document also calls for appropriate records to be
maintained to determine separate participant account balances and for a
yearly valuation of the plan assets. According to the most recent
information available to the department, the plan had three participants
and assets of $49,271. |
The
department’s suit, filed in federal district court in Ft. Lauderdale,
seeks to require that Hochberg restore all losses to the plan with
interest; offset his individual plan account if the losses are not
otherwise restored to the plan; and permanently bar him from serving as a
fiduciary to any employee benefit plan governed by ERISA. The department
also seeks the appointment of an independent trustee and administrator to
manage the plan, distribute its assets to participants and, if necessary,
terminate the plan. |
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Howard Marsh, director of the Atlanta regional office
of the Employee Benefits Security Administration (EBSA), which
investigated the case, said, “The department took legal action to ensure
that workers are paid promised benefits and to restore any assets owed to
the plan so money is available to pay retirement benefits to workers in
the future.” |
Employers
and workers can contact the Atlanta office at 404.562.2156 or EBSA’s
toll free number, 1.866.444.EBSA (3272), for help with any problems
relating to private-sector pension and health plans. |
(Chao
v. Gary M. Hochberg)
Civil Action No. 03-61859 |
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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. |
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