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Release Date: 12/10/2002
Release Number: 194
Contact Name: Michael Shimizu
Phone Number: 206.553.7620
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San Francisco, California - The U.S. Department
of Labor filed a complaint against L.A. Creative, Inc., sponsor of the
L.A. Creative 401(k) Plan for alleged violations of the Employee
Retirement Income Security Act (ERISA). The department is seeking to
restore losses of withheld employee contributions to the company’s
employee benefit plan that was based in Santa Monica, California The plan
was a prototype profit sharing plan that provided retirement benefits for
eligible employees of L.A. Creative, Inc. |
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Filed November 19, 2002, in the U.S. District Court for
the Central District of California, the suit results from an investigation
by the Los Angeles Regional Office of the Department’s Pension and
Welfare Benefits Administration (PWBA). Besides L.A. Creative, Inc., the
complaint names as defendant Francis L. Coiro who served as fiduciary of
the plan. The company, whose sole owner was Coiro, was the plan
administrator and the named fiduciary for the plan. |
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According to Billy Beaver, Los Angeles regional
director of PWBA, the alleged violations of ERISA began when the company
repeatedly failed to timely remit employee contributions to the plan from
its inception. In addition, the company failed to remit $34,330 in
withheld employee contributions. The complaint alleges that Coiro used the
withheld employee contributions to pay company operating expenses. |
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As of the date of the complaint, the plan is owed
$33,093 (excluding lost earnings) after one of the company’s debtors
reimbursed one of the participants after that participant brought suit
through the State of California Labor Commission. |
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The complaint seeks to have the defendants restore the
withholdings and lost earnings to the plan, to have the defendants
enjoined from acting as fiduciaries to any ERISA-covered plans in the
future, and to have an independent fiduciary with full discretionary
authority to manage and administer the plan and its assets appointed to
undertake the collection of delinquent contributions and lost assets from
the defendants and to effectively terminate the plan. |
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Beaver noted that plan sponsors with similar problems,
which are not yet subject of an investigation by PWBA, 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 PWBA enforcement actions and civil penalties as well
as applicable excise taxes. For more information about the VFCP, visit
www.dol.gov/pwba. |
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(Chao v. L.A. Creative, Inc., Francis L. Coiro, L.A.
Creative, Inc. 401(k) Plan) |
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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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