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Archived News Release--Caution:
information may be out of date.
For more information call: (202) 219-8921
The U.S. Department of Labor won a $2.7 million judgment against Job
Shop Technical Services, Inc., in Farmingdale, N.Y., and Ralph Corace, the
former trustee of the company's 401(k) plan, in the largest case brought by the
department to date for 401(k) abuse.
"Millions of Americans depend on the department to protect their
retirement benefits," said Secretary of Labor Alexis M. Herman. "Our actions
are designed to stop the abuse and diversion of pension money so that workers
can look forward to a secure retirement."
In a lawsuit filed by the department in October 1995, Corace was
charged with failing for two years to forward employee contributions to the
company's 401(k) plan. Job Shop Technical Services, Inc., which also operated
under the name International Technical Services, was a national leasing company
for engineers and consultants and maintained a 401(k) plan for 755
participants. At the time the abuses were alleged, the plan held approximately
$4.3 million in assets.
In partial satisfaction of the $2.7 million consent judgment, Corace is
required to oversee transfer to the plan of 1.5 million shares of Consolidated
Technology Group, Ltd., stock currently being held in escrow for the plan; to
transfer to the plan all principal and interest payments received on the
investment in 1601 Restaurant, Inc., an investment he owns; and to sell the
property he jointly owns with his wife in Plantation, Fla. He is also
permanently barred from serving as a fiduciary or service provider for any
employee benefit plan covered by the Employee Retirement Income Security Act
(ERISA).
The judgment also settles a separate lawsuit brought against Corace by
an independent trustee, John Braslow. The consent judgment is not binding on
any government agency other than the Department of Labor nor does it prevent
the independent trustee from pursuing legal claims against other individuals
not named in the secretary's action.
In a separate agreement, Resource Management International, Inc., which
purchased the Job Shop assets, has agreed to restore $300,000 to the 401(k)
plan.
The lawsuit and resulting consent judgment are part of a multi-agency
federal initiative to crack down on abuse of private-sector pension plans. This
case was investigated by the New York Regional Office of the Pension and
Welfare Benefits Administration (PWBA). PWBA administers and enforces
provisions of ERISA.
A criminal case against Corace is still pending. Corace pleaded guilty
to embezzlement of the $2.7 million in employee contributions and is awaiting
sentencing.
The consent judgment was entered June 17 in the federal district court
in Hauppauge on Long Island, N.Y.
# # #
(Herman v. Corace)
Civil Action No. 95 4250
(Braslow v. CEP Consultants and Ralph Corace)
Civil Action No. 96 CV 5119
Archived News Release--Caution:
information may be out of date.
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