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2012 ERISA Litigation and Significant Issues in Litigation

LABOR DEPARTMENT PARTICIPATION IN ERISA LITIGATION
AND SIGNIFICANT ISSUES IN LITIGATION

Compiled by the Plan Benefits Security Division
Office of the Solicitor

CALENDAR YEAR 2012

TABLE OF CONTENTS

A.    Employer Stock

B.    Financing the Employer

1.    Collection of Plan Contributions

2.    Insurance Rebates

3.    Miscellaneous

C.    Financing the Union

D.    Prudence

E.    Preemption

F.    Participants' Rights and Remedies

G.    Section 510

H.    Defensive Litigation

I.    Participant Loans

J.    MEWAs

K.    Financial Institution and Service Provider Cases

L.    Orphan Plans

M.    Contempt and Subpoena Enforcement

N.    Miscellaneous

TABLE OF CASES

Access Mediquip v. United Health (5th Cir.) (en banc)

Adams, Solis v. (D. Neb.)

All American Rentals, Inc., Solis v. (N.D. Cal.)

ALPA v. United Airlines (California Court of Appeals)

American Airlines, In re (Bankr. S.D.N.Y.)

Amtren, Inc., Solis v.; Otorhinolaryngology Associates, P.C. (M.D. Ala.)

Angell, Solis v. (M.D. Fla.)

Arendt, Solis v. (9th Cir.)

Atchison, Solis v. (S.D. Ohio)

Awesome Enterprises, Solis v. (S.D. Fla.)

B & K Builders, Inc., Solis v. (W.D. Wis.)

Baldino, Solis v. (D. Wyo.)

Barboza v. California Assoc. of Firefighters (9th Cir.)

Beacon Associates, In re (S.D.N.Y.)

Beacon Associates Management Corp., Solis v. (S.D.N.Y.)

Belding Hausman Inc., Solis v. (W.D.N.C.)

Berman, Solis v. (D.S.C.)

Bio-Med Plus 401(k) Plan; First NLC 401(k) Plan; and Pharmed Group 401(k) Plan (unfiled)

B.I.T. Computers, Inc. 401(K) Profit Sharing Plan, f/k/a BIT Consulting Group, Inc. 401(K), Solis v. (E.D.N.Y.)

Black, Solis v. (N.D. Ohio and Bankr. N.D. Ohio)

Blodgett, Solis v. (E.D. Mich.)

Bloomgren, Solis v. (D. Minn.)

Blue Raven Technology, Inc., In re (Bankr. D. Mass.)

Botes, Solis v. (N.D. Ga.)

Breeden & Collier Co., Inc., Solis v. (E.D. Va.)

Bruister, Solis v. (S.D. Miss.)

BSML, Inc. d/b/a Britesmile, Solis v. ; BSML, Inc., Solis v. (S.D. Fla. and Bankr. S.D. Fla.)

Button Holdings, LLC, Solis v. (D. Vt.)

By Design Consulting Corporation, Solis v. (N.D. Ga.)

Cape Allied Transit, Inc., Solis v. (D. Mass.)

Capeway Yarns, Inc., Solis v. (D. Mass)

Caputo, Solis v. (N.D. Fla.)

Cardio Fitness Center 401(k) Plan, Solis v. (S.D.N.Y.)

Cardiografix, Inc., Solis v. (N.D. Cal.)

CIGNA Corp. v. Amara (S. Ct. and D. Conn.)

C.K. Design and Construction 401(k) Plan, Solis v. (D. Mont.)

Clark Graphics, Solis v. (S.D. Ohio)

Compass Capital Partners, Ltd. Defined Benefit Retirement Plan (E.D. Pa.)

Conlon, Solis v. (E.D.N.Y.)

Corinthian Custom Homes, Inc., Solis v. (M.D. Tenn.)

Cottone, In re (Cougar Packaging) (Bankr. N.D. Ill.)

Cozen O'Connor v. Tobits (E.D. Pa.)

Crown Auto, Inc., Solis v. (C.D. Cal.)

CSG Group, Inc., Solis v. (N.D. Ga.)

Curry, Solis v. (S.D. Ind. and Bankr. S.D. Ind.)

Custom Navigation Systems, Inc., Solis v. (D. Conn.)

Custom Patio Rooms, Inc., Solis v. (W.D. Pa.)

Daniels Electric Corp., Solis v. (D.N.H.)

Danks, Solis v. (S.D. Ind.)

David v. Alphin (4th Cir.)

Davis, Solis v. (N.D. Ill.)

Dayton Imaging Solutions, Inc., Secretary v. (S.D. Ohio)

DeStefano, Solis v. (E.D. Mo.)

Diamond Air Freight, Inc., Solis v. (S.D. Fla.)

Dietrich & Associates and Kurt E. Dietrich, Solis v. (E.D. Pa.)

Dombrek, Solis v. (N.D. Ill. and Bankr. N.D. Ill.)

Douglass Brothers, Inc., Solis v. (D.R.I.)

Doyle, Solis v. (D.N.J. and 3d Cir.)

Dudenhoffer v. Fifth Third (6th Cir.)

Dynasty Construction, Inc., Solis v. (D. Md.)

Eichholz Law Firm, P.C., Solis v. (S.D. Ga.)

Elecom, Inc., Solis v.; Mejorado, Solis v. (In re Mejorado) (E.D. Cal. and Bankr. E.D. Cal.)

Embrenche LLC, Solis v. (M.D.N.C.)

England, Solis v. (E.D. Pa.)

Estate of John Buckingham, Solis v. (D. Md.) [B.1. Collection of Plan Contributions]

Estate of John Buckingham, Solis v. (D. Md.) [B.3. Miscellaneous]

Explore General, Solis v.; Gonzalez, Solis v. (In re Gonzales) (E.D. Cal. and Bankr. E.D. Cal.)

Explore, Inc., Solis v. (D. Md.)

Family Mobile Medical Retirement Plan, Secretary v. (N.D. Ind.)

Fensler, Solis v. (N.D. Ill.)

Fernandes, Solis v. (E.D. Mich.)

First Bankers Trust Services, Inc. and Vincent DiPano, Solis v. (D.N.J.)

First Bankers Trust Services, Inc. and Frank Firor, Solis v. (S.D.N.Y.)

First Restoration Services, Solis v. (W.D.N.C.)

Fisch v. Suntrust Bank (11th Cir.)

Fish v. Greatbanc Trust Co. (7th Cir.)

Fisher v. JP Morgan (2d Cir.)

Fossen v. BC/BS of Montana (9th Cir.)

Franklin Printers Supply Company, Inc. Retirement Savings Plan, Solis v. (D.N.J.)

Frommert v. Conkright (2d Cir.)

Garrison, Solis v. (W.D.N.C.)

Gearlds v. Entergy Services (5th Cir.)

Gearren v. McGraw-Hill (2d Cir.)

George v. Junior Achievement of Central Indiana (7th Cir.)

Georgetown Realty, Inc., Secretary v. (D. Ore.)

Ginsbach, Harris v. (D.S.D.)

Glasgow, In re; Glasgow, Solis v. (Bankr. D.N.H.)

Gleave, Solis v. (In re Gleave) (Bankr. D. Ariz.)

Globalfon, Inc., Solis v. (E.D. Va.)

Grabowski, Solis v. (W.D. Pa.)

Gray v. Citigroup (2d Cir.)

GreatBanc Trust Co., Solis v. (C.D. Cal.)

Griffin v. Flagstar Bancorp, Inc. (6th Cir.)

Griffith, Solis v. (N.D.N.Y.)

Gupta, Solis v. (N.D. Ill.)

Hagstrom, Solis v. (D. Minn.)

Hall, Solis v. (W.D. Wis.)

Halo v. Yale Health Plan (2d Cir.)

Hardt, Solis v.; Hardt, Solis v. (In re Hardt) (C.D. Cal. and Bankr. E.D. Cal.)

Harlow, Solis v. (D. Mass.)

Harris, Solis v. (D. Minn.)

Hartford Construction Group, LLC, Solis v. (N.D. Ga.)

Hartmann, Solis v.; Bruce Hartmann, In re (N.D. Ill. and Bankr. N.D. Ill.)

Harvey, Pennington, Ltd., Solis v. (E.D. Pa.)

HBMG, Inc., Solis v. (W.D. Tex.)

Hensley Engineering Group, LLC, Solis v. (D.N.M.)

Hi-Country Electric, Inc., Secretary v. (E.D. Cal.)

Hofmeister, Solis v. (E.D. Ky.)

Horizon Medical Group, Solis v. (M.D. Fla.)

Horning, Solis v. (D. Mont. and Bankr. D. Mont.)

Hostetler, Solis v. (N.D. Ind.)

Hudec, Solis v. (D. Md.)

Hutcheson, Solis v. (D. Idaho)

In the Matter of Mid-States Express, Inc. (Bankr. N.D. Ill.)

Innovative Logistics Techniques, Inc., Solis v. (E.D. Va.) [B.1. Collection of Plan Contributions]

Innovative Logistics Techniques, Inc., Solis v. (E.D. Va.) [B.3. Miscellaneous]

Invenio Technologies Corporation, Solis v. (D. Mass.)

Jackson Home Medical Equipment, Inc., Solis v. (E.D. Mich.)

James E. Scott Community Association (unfiled)

Jeanneret Associates, In re (S.D.N.Y.)

Jeffreys Seed Company, Solis v. (E.D.N.C.)

J.M. Singley & Associates, Inc., Solis v. (E.D. Pa.)

Johnson, Solis v. (D.N.J.)

Jones, Solis v. (E.D. Mich.)

Joos, Solis v. (D. Minn. and Bankr. D. Minn.)

J.P. Maguire Company, Inc. Salary Savings Plan, Solis v. (E.D.N.Y.)

J.W. Buckholz Traffic Engineering, Inc., Solis v. (M.D. Fla.)

Kenseth v. Dean Health Plan (W.D. Wis. and 7thCir.)

Kephart, Solis v. (W.D. Pa.)

Kineticsware, Inc., Solis v.; Sampson, Solis v. (In re Sampson) (W.D. Wash. and Bankr. W.D. Wash.)

Kiser, Solis v. (E.D. Ky. and Bankr. M.D. Fla.)

Klein Construction Services, Inc., Solis v. (N.D. Ill.)

Kopp v. Klein (5th Cir.)

Kreager, Solis v. (D. Minn.)

Kreeger, Solis v. (W.D. Wis.)

L.A. Utilities, Inc., Solis v. (S.D. Tex.)

Lanfear v. Home Depot (11th Cir.)

Leal, Solis v. (In re Leal) (Bankr. C.D. Cal.)

Ledford, Solis v. (S.D. Ind. and Bankr. S.D. Ind.)

Lehman Bros. ERISA Litig., In re (2d Cir.)

Leimkuehler v. American United Life Ins. Co. (7th Cir.)

Lensing, Solis v. (Bankr. E.D. Mo.)

Levy, Solis v. (N.D. Ind. and Bankr. N.D. Ind.)

Lewis M. Carter (unfiled)

LFAC, Inc. Profit Sharing 401(k) Plan, Solis v. (N.D. Ohio)

Life Care Hospice, Solis v. (N.D. Ala.)

Lifecare of Alabama, Solis v. (N.D. Ala.)

Lippmann, Solis v. (Bankr. Utah)

Local 911 Annuity Defined Contribution Fund, Solis v. (D.N.J.)

Louis & Riparetti, Inc., Solis v. (N.D. Cal.)

Lunsford, Harris v. (S.D. Ill.)

Marks, Solis v.; Nieves, In re (E.D.N.Y. and Bankr. D. Md.)

Masek, Solis v. (W.D. Mich.)

Mashali, Solis v. (D. Mass.)

Massam, Solis v. (S.D. Fla.)

Maximus Multimedia International, LLC, Solis v. (C.D. Ill.)

McCravy v. MetLife (4th Cir.)

McLemore v. Regions Bank (1 Point Solutions) (6th Cir.)

McNamee, Solis v. (S.D.N.Y.)

Mekos, Solis v. (N.D. Ind.)

Merritt, Solis v. (S.D. Ohio)

Miles, Solis v. (D.S.C.)

Milton Pate and Associates, Inc., Solis v. (N.D. Ga.)

Monocacyfabs, Inc., Solis v. (E.D. Pa.)

Moore, Solis v. (C.D. Cal.)

Mordo, Solis v. (S.D.N.Y.)

Morris, Solis v. (N.D. Ill.)

Mozingo v. Trend Personnel Services (10th Cir.)

Multicultural and Literacy Institute, Solis v. (E.D. Pa.)

National Rural Electric Cooperative Association Settlement

N.C. Caro, M.D., Solis v. (N.D. Ill. and Bankr. N.D. Ill.)

New England Building Materials, LLC, In re (Bankr. D. Me.)

Newstarcom Holdings, Inc., In re (Bankr. D. Del.)

Oakes, Solis v. (W.D. Mich.)

OPT, Inc., Solis v. (N.D. Cal.)

Oral & Maxillofacial Surgery Associates of Greater New Haven, PC, Solis v. (D. Conn.)

Owens, Solis v. (N.D. Ohio and Bankr. S.D. Ohio)

Pacific Shores Hospital v. United Behavioral Health (9th Cir.)

Palmer, Solis v. (N.D.N.Y.)

Parnell & Co., LLC, Solis v. (D.S.C.)

Perlis, Solis v. (N.D. Ga.)

Pfiel v. State Street (6th Cir.)

Powerlinx, Inc., Solis v. (M.D. Fla.)

Premier Mortgage, Solis v. (M.D. Fla.)

Progressive Machine Company, Inc. 401(k) Plan, Solis v. (D.N.J.)

Randall, Solis v. (S.D. Ohio and Bankr. S.D. Ohio)

Ratliff, Inc., Solis v.; Ratliff, Solis v. (W.D. Okla. and Bankr. W.D. Okla.)

Red, Solis v. (N.D. Fla.)

Regional Mechanical, Inc., Solis v. (N.D. Cal.)

Results One, Solis v. (N.D. Ill.)

Rice, Solis v. (N.D. Ohio)

Robert Plan Corp., In re (Bankr. E.D.N.Y.)

Roberts, Solis v. (W.D. Pa.)

Roetker, Solis v. (N.D. Ind.)

Rothstein Rosenfeldt and Adler, Solis v. (S.D. Fla.)

Rusty's Truck Service Inc. Profit Sharing Plan, Solis v. (N.D.N.Y.)

Santomenno v. John Hancock Life Ins. Co. (3d Cir.)

Schultz v. Prudential (7th Cir.)

Seher, Solis v. (N.D. Ind.)

SEI Environmental, Inc., Solis v. (M.D. Tenn.)

Seibert, Solis v. (M.D. Fla. and 11th Cir.)

Sellner, Solis v. (D. Minn. and Bankr. D. Minn.)

Sempre, Solis v. (In re Sempre) (Bankr. C.D. Cal.)

Sewright v. ING Group NV (11th Cir.)

Sherfel v. Gassman (S.D. Ohio)

Sigurdsson, Solis v. (D. Md.)

Silicon Plains Technologies, Inc., Solis v. (M.D. Fla., S.D. Iowa, and Bankr. M.D. Fla.)

Singley and Associates, Inc., Solis v. (E.D. Pa.) [B.1. Collection of Plan Contributions]

Singley and Associates, Inc., Solis v. (E.D. Pa.) [M. Contempt and Subpoena Enforcement]

Sipes, Solis v. (E.D. Mich.)

Sky Management 401(k) Plan (aka Ameri-Fi 401(k) Plan) (D.R.I.)

Smart Technology, Inc., Solis v. (E.D. Va.)

Sonora Environmental, L.L.C., Solis v. (D. Ariz.)

Sonoran Commercial Group, L.L.C., Solis v. (D. Ariz.)

Sophisticated Technologies, Inc., Solis v. (C.D. Cal.)

Source HR, LLC, Secretary v. (E.D. Mich.)

Southeastern Materials, Solis v. (M.D.N.C.)

Spencer, Solis v. (S.D. Ohio and Bankr. S.D. Ohio)

Stephen Bosniak, MD, PC, Profit Sharing Plan, Solis v. (E.D.N.Y)

Stuart, Solis v. (C.D. Cal.)

Stuart, Solis v.; Schmitz, Solis v. (In re Schmitz) (C.D. Cal. and Bankr. E.D. Cal)

Surplus Assets, Inc., Solis v. (D. Md.)

Taylor v. Key Corp. (6th Cir.) [A. Employer Stock]

Taylor v. Key Corp. (6th Cir.) [F. Participants' Rights and Remedies]

Tele-Optics of Nashville, Solis v. (M.D. Tenn.)

Thelen LLP, In re (Bankr. S.D.N.Y.)

Themescapes, Inc., Solis v. (D. Minn.)

Thinkstream, Inc., Solis v. (M.D. La.)

Thomas, Solis v. (M.D. Pa.)

Tibble v. Edison (9th Cir.)

Tomco Auto Parts, Inc., Solis v.; Schoenfeld, Solis v. (In re Schoenfeld) (C.D. Cal. and Bankr. C.D. Cal.)

Towson Rehabilitation Center, LLC, Solis v. (D. Md.)

Tradition, Solis v. (W.D.N.C.)

Tri-3 v. Aetna (3d Cir.)

Tricad, Solis v. (N.D. Ind.)

Triple T Construction, Inc., Solis v. (M.D. Fla.)

Tripp Mechanical, Solis v. (E.D.N.C.)

Trotter, Solis v. (S.D. Ind.)

UnitedHealth Group, Inc. Solis v. (D. Minn.)

U.S. Airways v. McCutchen (S. Ct.)

Vanguard, Solis v. (S.D. Fla.)

Ver Helst, Solis v. (S.D. Iowa)

Wagner, Solis v. (N.D. Ill.)

Wahlco Fabricators, Inc., Solis v.; Wahl, Solis v. (N.D. Okla. and Bankr. N.D. Okla.)

Wallis, Solis v. (N.D. Ill. and Bankr. N.D. Ill.)

Walsh, Solis v. (S.D. Fla.)

Waters, Solis v. (N.D. Ill.)

Webb, Solis v. (N.D. Cal.)

Weir, Solis v. (W.D. Pa.) [B.1. Collection of Plan Contributions]

Weir, Solis v. (W.D. Pa.) [M. Contempt and Subpoena Enforcement]

Weiss, Solis v. (E.D.N.Y.)

Western Mixers, Solis v. (C.D. Cal.)

White & Marshall & Isley Corp. (7th Cir.)

Williams, Solis v. (N.D. Cal.)

Windswept Environmental 401(k) Plan c/o Windswept Environmental Group, Inc. d/b/a Trade-Winds Environmental Restoration Inc., Solis v. (E.D.N.Y.)

Winer Industries 401(k) Profit Sharing Plan, Solis v. (D.N.J)

Yanek, Solis v. (E.D. Va.)

Zenith Capital, Solis v. (N.D. Cal.)

Zohouri Group, Solis v. (N.D. Ga.)

Zucker, Solis v. (N.D. Ohio and Bankr. S.D. Ohio)

A.    Employer Stock

Solis v. Bruister (S.D. Miss.)

On April 29, 2010, the Secretary filed a complaint against Herbert Bruister, Jonda Henry, Amy Smith and Michael Bruce, as trustees of the Bruister ESOP, in connection with the purchase of stock in Bruister & Associates, Inc. from Herbert Bruister for more than its fair market value. Bruister sold 100% of his shares to the ESOP in five transactions between December 2002 and December 2005 for more than $24 million. Bruister & Associates was a Direct TV installer with more than 1,000 employees until it became defunct, making the ESOP's stock worthless in 2007. The Secretary alleges that the ESOP's trustees failed to engage in the requisite due diligence process prior to hiring the valuation appraiser, failed to provide complete and accurate financial information to the appraiser, and failed to review, understand, and critically analyze the valuations in order to determine whether reliance on them was reasonably justified. The Secretary further asserts that the valuations could not be relied upon because of facial defects, including adding (rather than subtracting) a discount for lack of marketability, utilizing overly optimistic growth projections, failing to account for large amounts of corporate debt, and failing to account for single-customer risk. On July 1, 2011, the Secretary amended the complaint to add a kickback claim as to the first of the five transactions, alleging that Bruister agreed to pay one of the ESOP's trustees a 5% commission on the value of that stock sale. In September 2011, the Secretary participated in a court-ordered mediation, which included two related cases (insurance coverage litigation and private ERISA litigation arising out of the same general set of facts and circumstances) and did not result in any resolution. At the end of 2011, numerous motions were pending, including defendants' partial motion to dismiss, the Secretary's cross-motion for summary judgment, and the Secretary's appeal from one of the magistrate's discovery orders. The court ruled on the discovery order, as a result of which the Secretary was given additional documents that were not available when the summary judgment motions were originally filed. The court sua sponte dismissed the pending motions and ordered them to be re-filed. The parties re-filed motions for summary judgment on the merits and expert challenges. Atlanta Office and Plan Benefits Security Division

Solis v. Caputo (N.D. Fla.)

On June 24, 2010, the Secretary filed a complaint against Robert S. Caputo; Robert S. Caputo, D.O., P.A.; Glenn Bankert; Oden and Thielking, CPAs; and Stephen Thielking. The complaint alleges that Dr. Caputo, Dr. Bankert, and Caputo's practice are all fiduciaries of the Robert S. Caputo D.O. ESOP and that Thielking and his accounting firm were knowing participants in the fiduciary breaches. The fiduciaries allegedly failed to monitor the employer's operations and management and failed to take action on behalf of the ESOP when inappropriate personal expenses were being paid from the employer's general assets. The ESOP owns nearly all of the practice, so the inappropriate use of the practice's assets adversely affected the value of the ESOP's assets. Furthermore, the ESOP's accountant treated those expenses as accounts receivable, artificially inflating the company's stock valuation. As a result, the ESOP overpaid for shares that it purchased from participants leaving the plan. During court-ordered mediation, the Secretary reached an agreement with the fiduciaries as follows. (1) Drs. Caputo and Bankert will be removed from their positions as fiduciaries to the Caputo ESOP, enjoined from acting as fiduciaries to any ERISA-covered plans in the future, except for any plans that they currently serve as fiduciaries, and enjoined from committing further ERISA violations; (2) An independent fiduciary, appointed to the Caputo ESOP at Drs. Caputo and Bankert's expense, will sell the property owned by the Caputo and Bankert ESOPs, with the sale proceeds divided equally between the ESOPs; (3) The independent fiduciary will distribute the assets of the Caputo ESOP and terminate the plan; and (4) Dr. Caputo's participant share of the assets from the sale of the property will be applied as an offset against the first $225,000 that the Secretary alleges is due to the plan, with Dr. Caputo receiving any cash assets from the sale that exceed $225,000 and all of the shares of the Caputo P.A. The parties anticipate that claims involving the Bankert ESOP will be settled in the same manner from the same property sale. A consent judgment and order will memorialize the parties' agreement, the terms of which were reported to the court at the conclusion of the mediation. Mediation with the accountants was unsuccessful, and trial has been scheduled. Atlanta Office

Dudenhoffer v. Fifth Third (6th Cir.)

This is an appeal from a district court decision holding that the Moench presumption (that an ESOP fiduciary is entitled to a presumption that it acted consistently with ERISA by investing in employer stock) adopted in the Sixth Circuit incorporates a "dire financial situation" test and that the defendant was not in such a situation because it was still financially viable. The district court also rejected the plaintiffs' claim that the fiduciaries had made misrepresentations to plan participants in SEC filings, which were incorporated in plan documents, about the company's subprime lending prices, which artificially inflated the stock price. The district court reasoned that the incorporation was not intentional and therefore not a fiduciary communication. Plaintiffs' opening brief was filed on July 7, 2011, and the Secretary filed an amicus brief on July 14, 2011, making similar arguments to those made in KeyCorp and other cases by arguing that the "dire financial situation" test deviates from the prudent man rule and that SEC filings incorporated in plan documents are also fiduciary communications. The Secretary participated in oral argument on June 7, 2012. On September 5, 2012, the Sixth Circuit issued a favorable decision on the presumption and pleading issues based on the Pfeil v. State Street decision. A cert. petition is pending in the Supreme Court. Plan Benefits Security Division

Solis v. First Bankers Trust Services, Inc. and Vincent DiPano (D.N.J.)

On July 17, 2012, the Secretary filed a complaint against the fiduciaries of the SJP Group, Inc. ESOP, alleging that they caused the ESOP to purchase employer stock for millions of dollars in excess of the stock's fair market value. The Secretary alleges that GreatBanc, as the institutional trustee charged with determining the fair market value of the stock, ignored obvious errors in the valuation report and failed to determine whether the financial information provided by the plan sponsor was reliable. The Secretary further alleges that SJP Group, Inc. and its president Vincent DiPano, as the fiduciaries that appointed GreatBanc as trustee, failed to monitor GreatBanc's performance and allowed the transaction to take place knowing that the purchase price was in excess of fair market value. First Bankers filed a motion to dismiss on October 16, 2012, and Vincent DiPano filed a motion to dismiss on October 30, 2012. The Secretary responded to these motions on December 3, 2012, and Defendants' replies were filed December 17, 2012. Discovery has been stayed pending resolution of the motions. New York Office

Solis v. First Bankers Trust Services, Inc. and Frank Firor (S.D.N.Y.)

On November 28, 2012, the Secretary filed a complaint against the fiduciaries of the Rembar, Inc. ESOP, in connection with the ESOP's purchase of 100% of the plan sponsor's stock. The complaint alleges that First Bankers Trust Services, Inc., the institutional trustee charged with determining the fair value of Rembar's stock, failed to carry out a meaningful review of the valuation of the stock and caused the ESOP to overpay by at least $2.5 million. The complaint also alleges that Firor, the selling shareholder, was a knowing participant as well as a functional fiduciary because he appointed First Bankers as trustee but failed to monitor or remove it despite knowing that the ESOP overpaid him for his stock. New York Office

Fisch v. Suntrust Bank (11th Cir.)

This is an interlocutory appeal from a district court decision holding that ERISA barred the plaintiffs' claim that fiduciaries were imprudently offering employer stock when they knew it was imprudent given the company's investments in subprime mortgages. The court reasoned that the claims were in fact diversification claims and therefore barred by the diversification exemption for fiduciaries of ESOP plans that hold employer stock. The court concluded that the Moench presumption contravened the statute because it would permit these claims despite the diversification exemption. The court also declined to dismiss the plaintiffs' misrepresentation claims. The parties' cross-petition for interlocutory review was granted. The Secretary filed an amicus brief on the Moench issues on July 15, 2011 and on the disclosure issues on August 12, 2011. The court has not yet issued its decision. Plan Benefits Security Division

Gearren v. McGraw-Hill (2d Cir.)

On June 4, 2010, the Secretary filed an amicus brief in support of the plaintiffs-appellants, who allege that investment in McGraw-Hill stock was imprudent during the relevant period because the company, through its subsidiary Standard & Poor's, derived much of its profits from its significantly flawed mortgage-backed securities rating business. The brief argues, as does the brief in the Citigroup case, that the district court erred in dismissing the claim based on a presumption that the fiduciaries acted imprudently in allowing the plan to purchase excessively risky employer stock at allegedly inflated prices; and the fiduciaries had an obligation not to mislead plan participants and to disclose information necessary for the protection of their benefits. The brief argues that the plaintiffs' claims are not foreclosed by the existence of possible security claims based on the same wrongdoing. The court heard argument, together with Citigroup, on September 28, 2010, and the Secretary participated in the argument. On October 19, 2011, the court issued an adverse decision, over a vigorous dissent, adopting a presumption of prudence and affirming the dismissal. The plaintiffs petitioned for panel and en banc rehearing on December 6, 2011, and the Secretary filed a brief supporting the petition on the same date. On February 22, 2012, the court denied the rehearing petition. The plaintiffs petitioned for cert. on June 22, 2012, and the Department reviewed and commented on the petition. The respondents filed their opposition to cert. on September 12, 2012. The Supreme Court denied cert. on October 15, 2012. Plan Benefits Security Division

Gray v. Citigroup (2d Cir.)

On December 28, 2009, the Secretary filed an amicus brief in support of the plaintiffs who allege that investment in Citigroup stock by the company's 401(k) plan was imprudent during the class period because the company was invested heavily in subprime mortgages and kept these investments off the balance sheets. The Secretary's brief takes issue with nearly all of the district court's decision dismissing the case, arguing that: (1) under ERISA 404(a)(1)(D), the defendants had fiduciary duties with respect to the plan investment in employer stock despite plan terms mandating such investments; (2) the court erred in dismissing the claim based on a presumption that the fiduciaries acted imprudently in allowing the plan to purchase excessively risky employer stock at allegedly inflated prices; and (3) the fiduciaries had an obligation not to mislead plan participants and to disclose information necessary for the protection of their benefits. The Secretary participated in oral argument in this and the Gearren case on September 28, 2010.On October 19, 2011, the court issued an adverse decision, over a vigorous dissent, adopting a presumption of prudence and affirming the dismissal. The plaintiffs petitioned for panel and en banc rehearing on December 6, 2011, and the Secretary filed a brief supporting the petition on the same date. On February 23, 2012, the court denied the rehearing petition. The plaintiffs petitioned for cert. on June 22, 2012, and the Department reviewed and commented on the petition. The respondents filed their opposition to cert. on September 12, 2012. The court denied cert. on October 15, 2012. Plan Benefits Security Division

Solis v. GreatBanc Trust Co. (C.D. Cal.)

On September 28, 2012, the Secretary filed a complaint against GreatBanc Trust Company and Sierra Aluminum Company, alleging that GreatBanc caused or permitted the Sierra Aluminum ESOP to purchase employer stock for more than its fair market value. The complaint alleges that GreatBanc, the ESOP's trustee, should not have relied on a valuation which, among other things, used aggressive and overly optimistic projections of Sierra Aluminum's future earnings and profitability, failed to account for its planned capital expenditures, made improper adjustments to its cash flows and failed to make any corresponding adjustments to the public companies used as comparables, inappropriately relied on the purportedly below market interest rate on the ESOP's loans to calculate that the fair market value of the consideration that the ESOP paid was far lower than the price that the ESOP actually paid, and valued the performance of Sierra Aluminum's business, which depends on a cyclical commodity, at the peak of its business cycle in perpetuity without any consideration of a drop in aluminum prices or, at a minimum, a reversion to average prices. The complaint further challenged Sierra Aluminum's indemnification agreement with GreatBanc, which required the company to pay for GreatBanc's defense. Under the agreement, GreatBanc has to repay any funds that the company advances for its defense if it is found liable by the court, but it is not required to repay such defense expenses absent an order finding it liable. The Secretary objected to the condition requiring a court finding of liability, maintaining that it is void as against public policy under ERISA 410(a). Plan Benefits Security Division

Griffin v. Flagstar Bancorp, Inc. (6th Cir.)

This is an appeal from a district court decision holding that the Moench presumption adopted in the Sixth Circuit incorporates a "dire financial situation" test and that the defendant was not in such a situation because it was still financially viable. The district court also agreed with the plaintiff that misrepresentations to plan participants in SEC filings and incorporated in plan documents are fiduciary communications. However, the district court dismissed the claims because the plaintiffs failed to identify any misrepresentations under Twombly. The Secretary filed an amicus brief on June 30, 2011, making similar arguments to those made in KeyCorp and other cases by arguing that the "dire financial situation" test deviates from the prudent man rule and that SEC filings incorporated in plan documents are fiduciary communications. The Secretary participated in oral argument on June 8, 2012. The Sixth Circuit issued a favorable decision on July 23, 2012, holding that, under Pfiel v. State Street, the presumption of prudence does not apply on a motion to dismiss, ERISA 404(c) does not exempt fiduciaries from their duty to select a prudent line-up of investment options, and that plaintiffs sufficiently pled a claim for fiduciary breach. Plan Benefits Security Division

Kopp v. Klein (5th Cir.)

This case raised issues relating to fiduciary disclosure duties and the Moench presumption's applicability on a motion to dismiss. On March 15, 2012, the district court granted the defendants' motion to dismiss, and the plaintiffs appealed. The Secretary filed an amicus brief on August 15, 2012, arguing that plan fiduciaries are obligated to act prudently even if plan terms mandate investment in employer stock; that the Moench presumption of prudence is inapplicable at the pleadings stage; that a prudence (rather than "dire situation") standard should be used to rebut the presumption; and that fiduciaries have the duty to disclose truthful information about the employer's financial situation and the riskiness of investing in the employer's stock. Plan Benefits Security Division

Lanfear v. Home Depot (11th Cir.)

This case is similar to the Sewright v. ING Group NV case below. The plaintiffs claim that the defendants failed to disclose practices that inflated the price of Home Depot stock, but the district court dismissed the case for failure to state valid prudence or misrepresentation claims. On November 22, 2010, the Secretary filed an amicus brief arguing that the district court erred in treating the plaintiffs' prudence claims as diversification claims that do not state a violation in the employer stock context and erred in holding that the fiduciaries are immune from liability for purchasing imprudent investments in company stock because the plan terms mandate continued investment. The Secretary's brief also argued that the district court erred in finding that the fiduciaries are entitled to the Moench presumption of prudence with respect to the plan's purchase of employer stock and that the misrepresentation claim should also be dismissed based on a finding that the fiduciaries were acting in their corporate capacity in transmitting false information to the participant. The Secretary participated in oral argument on October 7, 2011. The court issued a mostly adverse decision on May 8, 2012, agreeing with the plaintiff and the Secretary that the case did not present a diversification claim, but holding that a Moench presumption tied to settler intent was applicable and supported dismissal on the pleadings. Plan Benefits Security Division

In re Lehman Bros. ERISA Litig. (2d Cir.)

This is an appeal from a dismissal on the pleadings of a case against Lehman based on an application of a presumption of prudence. On January 11, 2012, the Secretary filed an amicus brief arguing that, in light of the Citigroup decision, Lehman's financial situation prior to its collapse constituted a sufficiently dire situation to overcome the presumption of prudence that now attaches to employer stock investments in the Second Circuit. Plan Benefits Security Division

Pfiel v. State Street (6th Cir.)

This is an appeal from a district court decision dismissing the participants' claims that the independent fiduciary, State Street, waited too long to sell employer stock in a 401(k) plan as GM teetered on the verge of bankruptcy, even though plan documents required State Street to sell if the viability of the company was in question. The court held that the claim failed on causation grounds because the complaint did not plausibly allege that the loss was caused by the fiduciaries' conduct rather than the participants' conduct in holding onto the stock despite publicly available information about the company's condition. The Secretary filed an amicus brief on February 15, 2010, arguing that the Sixth Circuit's Kuper standard, and not the contractual language, should apply when judging the prudence of State Street's conduct, but that even under the contractual standard, the plaintiffs plausibly alleged that State Street breached its duty and also adequately pled that State Street's imprudence caused the Plans to lose hundreds of millions of dollars. The Secretary argued that the fact that the plans at issue here, like nearly all defined contribution 401(k) plans, allowed the participants to choose between different investment options, did not absolve State Street of its duty to ensure that the employer stock fund remained a prudent investment option for the plans or absolve State Street of its liability in failing to do so. Even in the limited circumstances where ERISA 404(c) provides a fiduciary safe harbor for losses that result from a plan participant's exercise of control over his or her individual retirement account, fiduciaries must still select and maintain prudent investment options and, under the Secretary's regulation, are liable for any resulting plan losses if they do not. On February 22, 2012, the court issued a favorable decision holding that the presumption did not apply at the pleadings stage, that the "dire situation" or "verge of collapse" was not the standard in the Sixth Circuit, that the fact that participants could direct their investments out of company stock did not mean that their actions, rather than the fiduciaries' breaches, proximately caused the plan losses, and that ERISA 404(c) did not provide the fiduciaries with a defense both because it does not apply on a motion to dismiss and because it does not relieve fiduciaries of their duty to screen investments. State Street petitioned for rehearing on the 404(c) and causation issues on March 7, 2012. The court denied the petition on March 28, 2012. On August 25, 2012, State Street filed a petition for cert. on the 404(c) issue. On December 3, 2012, cert. was denied. Plan Benefits Security Division

Sewright v. ING Group NV (11th Cir.)

The district court dismissed this case, based in part on a finding that the defendants had no discretion to stop investing in employer stock and thus were not acting in a fiduciary capacity; it was also based, in the alternative, on the Moench presumption of prudence. There also were duty to disclose issues. On November 12, 2010, the Secretary filed an amicus brief arguing that the court erred in holding that the defendants had no duty to override plan terms mandating investment in stock issued by ING, where it would be imprudent to continue to permit investment in employer stock at allegedly inflated prices; in holding that the defendants were entitled to a presumption of prudence in continuing to allow the plan to purchase employer stock and that the plaintiffs failed to plausibly plead facts overcoming the presumption; and in holding that the plaintiffs did not plausibly allege that the defendants breached their duty to speak truthfully to participants by providing misleading information about the company's financial condition. The private parties settled the case on June 4, 2012. Plan Benefits Security Division

Taylor v. Key Corp (6th Cir.)

This case survived a motion to dismiss because the district court held that the Moench presumption of prudence does not allow for dismissal at the pleading stage and does not require a showing of imminent collapse to rebut the presumption; the court also held that the plaintiff stated a viable misrepresentation claim based on allegations that the fiduciaries knowingly incorporated by reference into plan documents misleading information that was included in SEC filings. However, the district court later dismissed the case on constitutional standing grounds. The Secretary filed an amicus brief on the standing issue on January 12, 2011 (see Taylor v. KeyCorp, Section F. Participants' Rights and Remedies). KeyCorp's brief on the cross-appeal addressing the Moench and disclosure issues was filed on April 13, 2011; the plaintiffs' response was filed on May 13, 2011, and the Secretary filed an amicus brief on May 20, 2011, arguing against dismissals on the Moench presumption and disclosure issues. The Secretary participated in oral argument on April 20, 2012. On May 25, 2012, the court ruled that Taylor lacked Article III standing because she had gained more than she lost from the alleged violation and thus did not reach the merits issues. Plan Benefits Security Division

Solis v. Thomas (M.D. Pa.)

On February 17, 2011, the Secretary filed a complaint alleging that Stephen Thomas, president and director of Gagne Precast Concrete Products, Inc. and a trustee of its ESOP, caused the ESOP to pay more than fair market value for employer stock. He approved the ESOP's purchase of 100% of the employer's common stock for about $3.9 million, allegedly relying on a valuation based on stale and inaccurate data, unrealistic growth and risk assumptions, and other obvious flaws. Also, Thomas allegedly simultaneously represented the ESOP and his private equity company, which received numerous benefits in the deal, including equity instruments that directly reduced the ESOP's ownership interest in the company. In addition, the complaint alleges that Thomas failed to protect plan assets from dissipation. Thomas withdrew approximately $1.1 million in corporate assets. As a fiduciary, he had a duty to evaluate whether it was in the ESOP's interest to file a derivative lawsuit to challenge his misappropriation of corporate assets, but he did not do so, nor did he consider taking any other action to protect the ESOP's assets. On November 8, 2011, the court entered a consent judgment, finding that $225,000 is due to the ESOP and enjoining Thomas from serving as a fiduciary to any ERISA-covered plan for ten years. The defendant does not have sufficient funds, so a payment plan is incorporated into the consent judgment. This judgment is in conjunction with a settlement relating to another ESOP that the defendant established, the Frank L. Woodworth, Inc. ESOP. Concurrent with the execution of the consent order in Solis v. Thomas, Thomas executed a settlement agreement in which he agreed to pay $75,000 to the Woodworth ESOP, for which he also was a trustee. Thomas agreed to the appointment of an independent fiduciary for both plans and to pay all costs of administering the ESOPs. The funds will be collected through a payment plan with interim payments held by the independent fiduciary until distribution to the ESOPs' participants. Settlements of $10,000 and $5.000, respectively, have been executed with two other, Tchad Robinson and Brent Hartley. Thomas was indicted on April 4, 2012 for attempted tax evasion. As part of a guilty plea on September 11, 2012, he admitted that he failed to file his 2005 through 2007 individual income tax returns and failed to file 2005 through 2007 corporate income tax returns for ECG, an entity that he utilized to establish the Gagne and Woodworth ESOPs and to manage the companies. He also admitted that he engaged in a series of affirmative acts of tax evasion during 2005 through 2007. On January 23, 2013, Thomas was sentenced to 18 months in prison and ordered to pay $154,362 in restitution to the IRS. Boston Office

Solis v. Ver Helst (S.D. Iowa)

On December 30, 2011, the Secretary filed a complaint against Kurt Ver Helst, D.C., P.C. and Kurt Ver Helst, alleging that when the company's ESOP terminated in 2009, the fiduciaries permitted unallocated ESOP shares valued at $21,638 to revert to the company when they should have been allocated to participants and also failed to take any action to repay $62,939 in improperly charged interest on ESOP loans. The complaint also named Mark Eldridge as a knowing participant and sought his removal as a service provider. On January 7, 2013, the court entered a consent judgment ordering the company and Ver Helst to restore $20,000, permanently enjoining Ver Helst from serving as a fiduciary or service provider to any ERISA-covered plan, and enjoining Eldridge from providing any further services to the ESOP. Chicago Office

Solis v. Webb (N.D. Cal.)

On April 25, 2012, the Secretary filed suit against the fiduciaries of the Parrot Cellular ESOP, in connection with the plan's purchase of stock of Entrepreneurial Ventures, Inc., dba Parrot Cellular ("EVI") for more than its fair market value. The defendants are Dennis Webb, EVI's founder, former president, and director, Matthew Fidiam and J. Robert Gallucci, who were ESOP trustees, Plan Committee members, and EVI officers and Board members, and Consulting Fiduciaries, Inc. ("CFI"), which was the independent fiduciary for purposes of the stock transaction. The Plan purchased about 90% of EVI's stock for more than $28 million from Webb and others. The complaint alleges that the fiduciaries overpaid for the stock and should not have relied upon a valuation that, in addition to other flaws, contained at least one significant mathematical error, used inappropriate companies as comparables, used overly optimistic projections of future earnings and profitability, failed to consider and include relevant data, and failed to account for an existing $12 million deferred compensation agreement with Webb during the projected cash flow analysis. On September 26, 2012, the court issued an order denying the motions to dismiss filed by the fiduciaries and by the ESOP, rejecting their principal argument that an ESOP is not subject to ERISA until it is funded. Plan Benefits Security Division

White & Marshall & Isley Corp. (7th Cir.)

This is an appeal from a district court decision applying the Moench presumption to grant a motion to dismiss under a "viability as a going concern" standard. The district court also held that plaintiffs failed to state a claim for breaches of fiduciary duty based on Marshall & Isley's misrepresentations and failure to disclose the company's true financial condition. The court reasoned that these claims failed because plaintiffs did not allege that the fiduciaries made intentional misrepresentations and because the claims were conclusory and concerned business decisions made by Marshall & Isley. The plaintiffs filed their brief on May 9, 2012, and the Secretary filed an amicus brief on May 30, 2012. The Secretary participated in oral argument on September 13, 2012. Plan Benefits Security Division

B.    Financing the Employer

1.    Collection of Plan Contributions

Solis v. Adams (D. Neb.)

On April 13, 2012, the Secretary obtained a default judgment removing Marilyn K. Adams and Jeffrey L. Adams as fiduciaries to the AMS Healthcare Services, Inc. 401(k) Plan, permanently enjoining them from serving as ERISA fiduciaries, and appointing an independent fiduciary to terminate the plan and distribute its assets. The Secretary's complaint, filed on August 22, 2011, sought the appointment of an independent fiduciary and the permanent injunctions barring Marilyn and Jeffrey Adams, based upon criminal indictments against them for embezzling $111,136.79 in employee contributions from the plan. The defendants subsequently entered a plea deal requiring them to pay restitution to the plan participants. Denver Office

Solis v. All American Rentals, Inc. (N.D. Cal.)

On March 30, 2012, the Secretary filed a complaint against All American Rentals, Inc. (AAR) and its President, Michael Carter, for failing to collect mandatory employer contributions due the company's 401(k) Plan from March 2006 through July 2011. The complaint also alleges that the fiduciaries failed to remit employee contributions. The total amount due the plan is $257,949.84, plus lost opportunity costs. San Francisco Office

Solis v. Angell (M.D. Fla.)

On August 29, 2010, the Secretary filed a complaint against Chad Angell, Angell Contracting Construction, Inc., Creative Carpentry, Inc., and Angell Construction Services, Inc., alleging that they failed to remit and to timely remit employee contributions and participant loan repayments to the Angell Construction 401(k) Savings Plan and failed to collect unremitted employer matching contributions. The Secretary reached a consent judgment with Angell requiring him to pay to the plan $24,957.08, plus post-judgment interest, in installments of $300 per month. The consent judgment, which the court entered on April 25, 2012, also enjoined Angell from serving as a fiduciary, trustee, or service provider to any ERISA-covered plan and from violating ERISA in the future. The court also appointed an independent fiduciary to the plan. The corporate defendants had defaulted, and were not parties to the consent judgment. Atlanta Office

Solis v. Awesome Enterprises (S.D. Fla.)

On September 14, 2012, the Secretary filed a complaint against Awesome Enterprises, Inc. and Susan Evans, for failing to remit to the plan $29,047.10 in employee contributions and $11,305.06 in loan repayments. The lawsuit seeks restitution of all losses, removal of the fiduciary, a permanent injunction preventing Evans from serving as a fiduciary to any ERISA-covered plan, and the appointment of an independent fiduciary to oversee the plan at the defendants' expense. Atlanta Office

Solis v. B & K Builders, Inc. (W.D. Wis.)

On October 14, 2011, the Secretary filed a complaint against Kenneth Staab, Robert Aschenbrenner, and B & K Builders, Inc., fiduciaries of the company's 401(k) Plan, for failing to ensure that employee contributions were remitted and timely remitted to the 401(k) plan between June 2007 and June 2009. The complaint also alleges that Staab and B & K Builders, fiduciaries of the company's Prevailing Wage Plan, failed to ensure that employer contributions were remitted to that plan during the same time period. Pursuant to a consent order and judgment on December 3, 2012, the Department recovered $140,279, and Kenneth Staab was barred from serving as a fiduciary in the future. Chicago Office

Solis v. Baldino (D. Wyo.)

On May 25, 2012, the court issued a default judgment against Guy J. Baldino and Nationwide Supply, Inc., awarding $10,536.27 plus $1,836 in lost interest. The Secretary's complaint, filed on November 22, 2011, sought an order directing the defendants to restore $10,536.27 in employee contributions to the company's SIMPLE IRA Plan that they had failed to forward to the plan. Denver Office

Solis v. Belding Hausman Inc. (W.D.N.C.)

On July 27, 2011, the Secretary filed a complaint against Belding Hausman, Inc. and the company's president, Curtis Wilford Stowe, to restore employee contributions, employee loan repayments and lost earnings to the defunct company's deferred compensation plan. The lawsuit alleges that the company did not forward $59,230 in employee contributions and $72,703 in participant loan repayments to the plan. The complaint seeks a court order requiring the defendants to restore all losses, including any lost earnings, requiring that any of their claims to plan assets be offset against the losses, appointing an independent fiduciary, and permanently enjoining the defendants from serving as fiduciaries to any ERISA-covered plan. Atlanta Office

Solis v. Black (N.D. Ohio and Bankr. N.D. Ohio)

On December 4, 2012, the Secretary filed a complaint against Ruby Black, fiduciary of the Fresh Start, Inc., 401(k) Plan, alleging that she failed to remit $15,912.85 in employee contributions and loan payments from August 3, 2010 through May 27, 2011, and she failed to timely remit $125,867.80 in employee contributions and loan payments from July 13, 2007 through August 5, 2010. On August 6, 2012, the Secretary filed an adversary complaint in bankruptcy court against Black seeking to have Black's debts to the plan declared non-dischargeable. Chicago Office

Solis v. Bloomgren (D. Minn.)

The Secretary filed a complaint against Ronald Bloomgren on June 28, 2012, alleging that he failed to remit $10,642.36 in participant contributions and $6,804.00 in participant loan repayments and untimely remitted an additional $15,900.42 in participant contributions and $7,396.00 in loan repayments to the Earmold Design, Inc. 401(k) Plan. The court granted the Secretary's motion for default judgment on October 15, 2012. Chicago Office

Solis v. Botes (N.D. Ga.)

On December 1, 2008, the Secretary filed a complaint against Computer Consulting Services, Inc., sponsor of a 401(k) plan, and Andries Botes and Peter Steyn, plan fiduciaries, alleging failure to remit contributions and loan repayments for plan years 2005 and 2006. The suit seeks over $18,000 in contributions and over $3,000 in participant loan repayments, plus lost earnings, and asks the court to permanently enjoin defendants from serving as fiduciaries to any ERISA-covered plan. In a previous order, the court removed Botes as a fiduciary, barred him for at least 13 years from serving as a fiduciary as the result of a 2006 criminal conviction, and appointed an independent fiduciary to manage the plan. On February 2, 2010, the Secretary obtained an order denying Botes' motion for judgment on the pleadings. Botes had alleged that the Secretary: (1) lacked standing to sue; (2) failed to prove jurisdiction; (3) failed to timely prosecute the claim; and (4) failed to state a claim on which relief could be granted. The court disagreed with each of Botes' contentions. On March 3, 2010, the Secretary filed a motion for summary judgment. On November 24, 2010, the court denied the motion without prejudice to allow the defendant, who is incarcerated and pro se, an additional 75 days to conduct discovery. The Secretary's case against Steyn was settled, with his agreement to pay the plan $8,000. On June 28, 2011, the court granted the Secretary's motion for summary judgment with respect to the company, finding it liable for $20,951.80, and denied the Secretary's motion with respect to Botes. On September 21, 2011, the court issued an order denying Botes' motion for judgment on the pleadings. The court granted the Secretary's motion to stay the entire case until June 2, 2013, which is the scheduled date of Botes' release from federal prison. Atlanta Office

Solis v. Breeden & Collier Co., Inc. (E.D. Va.)

On August 10, 2012, the Secretary filed a complaint against Breeden & Collier Co., Inc. and Gregory J. Harmon, fiduciaries of the company's SIMPLE IRA Plan, for failure to forward and to timely forward employee contributions to the plan between January 2007 and December 2009. The complaint sought restoration of all losses and a permanent injunction barring the defendants from serving as fiduciaries to ERISA-covered plans. On October 26, 2012, the court entered default against both defendants. On January 4, 2013, the court held a hearing on the Secretary's motion for default judgment. Philadelphia Office

Solis v. BSML, Inc. d/b/a Britesmile (S.D. Fla.); Solis v. BSML, Inc. (Bankr. S.D. Fla.)

On January 5, 2012, the Secretary brought an action in bankruptcy court to remove $64,938.31 directly traceable to plan assets from the debtor/employer's bankruptcy estate. The Secretary contends that BSML Inc. and plan fiduciaries, Jeff Nourse and Tere Guerrero, caused all assets of the company's 401(k) Plan to be transferred into BSML's bankruptcy estate and that the debtor used over $160,000 of these assets to pay service providers and creditors in its bankruptcy action. In 2012, through voluntary compliance, the Secretary recovered $113,321.96 in plan assets wrongfully distributed through the bankruptcy court, plus lost earnings. On August 23, 2012, the bankruptcy court granted in part the Secretary's motion for summary judgment, ordering the return of $64,938.31, appointing an independent fiduciary to the plan, denying the Secretary's request that the debtor's estate pay for the independent fiduciary and lost earnings, and further ordering that all funds in BSML's estate which were traceable to plan assets be returned to the plan. These funds have been returned to the plan. Atlanta Office

Solis v. By Design Consulting Corporation (N.D. Ga.)

On February 1, 2012, the Secretary filed a complaint against By Design Consulting Corporation and plan trustee Randall Williamson Smith, for allegedly failing to remit employee contributions of $23,737.50 and participant loan repayments of $2,240.89 to the defunct company's 401(k) Plan between August 2006 and April 2009 and failing to timely remit employee contributions to the plan since May 2005. On March 16, 2012, the court entered a consent judgment requiring the defendants to restore all losses totaling $7,732.81 to the non-fiduciary participants' accounts, permanently barring them from serving as fiduciaries for any ERISA-covered plan, requiring Smith to allow any interest in existing or future plan assets to be offset against the amounts due the plan, and appointing an independent fiduciary at the defendants' expense. Atlanta Office

Solis v. Cardiografix, Inc. (N.D. Cal.)

On March 23, 2012, the Secretary filed a complaint against Cardiografix, Inc. and Dr. David Hyun, alleging that, from March 2008 through May 2010, they failed to remit and untimely remitted approximately $66,000 in employee contributions and participant loan repayments to the company's 401(k) Profit Sharing Plan. On July 10, 2012, after the defendants failed to answer the complaint, the Secretary filed a motion for default judgment, which the court granted on August 22, 2012, finding Hyun liable for all plan losses and for the cost of an independent fiduciary. The court also found that such amounts should be offset from Huyn's plan account. On December 5, 2012, the Secretary filed a motion to appoint an independent fiduciary to recover the amount of the judgment, terminate the plan, and distribute the plan's assets. San Francisco Office

Solis v. Conlon (E.D.N.Y.)

On February 2, 2012, the Secretary filed a complaint against William Joseph Conlon III, Mark Conlon, Margaret Conlon, and William J. Conlon & Sons, Inc., alleging that the defendants failed to forward approximately $70,000.00 in employee contributions and approximately $50,000.00 in employee loan repayments to the William J. Conlon & Sons Inc. 401(k) Plan. While Margaret Conlon filed an answer to the complaint, William Conlon, Mark Conlon, and the company did not file an answer or otherwise respond to the complaint, and the clerk of court entered a default against them. New York Office

Solis v. Corinthian Custom Homes, Inc. (M.D. Tenn.)

On November 4, 2010, the Secretary filed a complaint against Corinthian Custom Homes, and fiduciaries Nicholas Psillas, Deborah Psillas, and Richard DePriest, alleging that between 2005 and 2007, the defendants untimely remitted $100,248.96 in employee contributions to the company's 401(k) Plan, resulting in $13,036.16 in lost earnings. The complaint seeks an order requiring defendants to restore all losses, requiring any of their claims to plan assets to be offset against the losses, permanently barring them from serving in a fiduciary capacity to any ERISA-covered plan, and appointing an independent fiduciary to oversee the plan at the defendants' expense. On October 4, 2011, the Secretary filed an application for entry of the clerk's default as to all defendants, except Richard DePriest. On November 16, 2011, the clerk entered default as to Nicholas Psillas and Deborah Psillas. On August 24, 2012, the Secretary was informed that the bankruptcy trustee serving as fiduciary for Corinthian Custom Homes was arranging for $152,507 to be restored to the plan. The trustee is currently in the process of appointing an independent fiduciary to administer the plan. Atlanta Office

Solis v. CSG Group, Inc. (N.D. Ga.)

On April 4, 2011, the Secretary filed a complaint against CSG Group, Inc. and fiduciary Thomas Wimberly, alleging that during 2007 and 2008, approximately $15,562.00 in employee contributions were not forwarded to the company's Profit Sharing Plan and that during 2005, 2006 and 2007, many remittances and loan repayments were remitted late, resulting in additional lost earnings. During settlement negotiations, Wimberly paid $45,631.50 in restitution for all losses to the plan, including lost earnings. On February 29, 2012, the Secretary obtained a consent judgment, requiring Wimberly to complete eight hours of fiduciary education within 60 days of the order and enjoining him from further violations of ERISA. Atlanta Office

Solis v. Curry (S.D. Ind. and Bankr. S.D. Ind.)

On March 7, 2012, the Secretary filed a complaint in the district court against Karen Curry, Danny Woods and Heartland Foods, Inc., alleging that the defendants failed to remit $85,232.08 in employee contributions and loan repayments to the company's. 401(k) Profit Sharing Plan from January 1, 2008 to December 31, 2010. The complaint also alleges that defendants transferred $171,225.00 from the plan to Heartland Foods, Inc. and that defendants distributed $21,610.71 in plan assets to participants in excess of the amount authorized in the plan document. In addition to restitution, the complaint seeks to enjoin them from violating ERISA and from being fiduciaries or service providers to any ERISA-covered plan. On December 9, 2010, the Secretary filed an adversary complaint in the bankruptcy court seeking to have Karen Curry's debt to the plan declared non-dischargeable. The Secretary secured an order, entered May 31, 2012, deeming Curry's debt to the plan non-dischargeable. Cleveland Office

Solis v. Custom Navigation Systems, Inc. (D. Conn.)

On November 15, 2011, the Secretary filed a complaint alleging that Steven Gill and Custom Navigation Systems, Inc, fiduciaries of the company's 401(k) Profit Sharing Plan, failed to forward in excess of $74,000 in employee contributions and loan payments. The court entered a consent judgment on April 12, 2012, requiring payment of $38,774, representing full payment due to all non-fiduciary participants. Gill was also permanently barred from serving as a fiduciary or service provider to any ERISA-covered plan. Boston Office

Solis v. Daniels Electric Corp. (D.N.H.)

On November 29, 2012, the Secretary filed a complaint alleging that the Daniels Electric Corporation and Gerard and Barbara Milligan, the functional fiduciaries, failed to remit employee contributions and failed to collect $78,167 in matching employer contributions to the company's SIMPLE IRA Plan from 2006 through 2009. Boston Office

Solis v. Danks (S.D. Ind.)

On May 11, 2012, the Secretary filed a complaint against Derek Michael Danks, Karen Williams, and Sun Mortgage, LLC, fiduciaries of the company's 401(k) Plan, alleging that they failed to remit $30,906.90 in employee contributions and loan payments to the plan from August 1, 2006 through July 6, 2009 and failed to timely remit $37,884.90 in employee contributions and loan payments from April 1, 2006 through November 16, 2007. The complaint also alleged that there was a prohibited loan between the plan and Danks and that the defendants failed to file annual reports, distribute summary annual reports and maintain a fidelity bond. In a separate criminal proceeding, Danks entered into a plea agreement filed on February 20, 2013, in which he agreed to repay $26,387 in mandatory restitution representing unremitted employee contributions and loan payments owed to plan participants other than himself. The court will impose a sentence at a later date. Chicago Office

Secretary v. Dayton Imaging Solutions, Inc. (S.D. Ohio)

On August 3, 2012, the Secretary filed a complaint against Dayton Imaging Solutions, Inc. and Bryan Belden, fiduciaries of the company's SIMPLE IRA Plan, alleging that they failed to remit $21,156.10 in employee contributions to the plan from July 6, 2005 through October 20, 2010 and failed to timely remit employee contributions, resulting in an additional $11,555.77 in lost earnings. The complaint also alleges that the fiduciaries failed to make certain required annual disclosures to participants. The complaint seeks restoration of all plan losses including interest, as well as injunctive relief prohibiting all future ERISA violations and barring Belden from acting as a fiduciary to any ERISA-covered plan. Chicago Office

Solis v. DeStefano (E.D. Mo.)

On November 9, 2011, the Secretary filed a complaint against Elisabeth DeStefano, seeking restoration of contributions not forwarded, plus lost earnings, for employees participating in The Display Center SIMPLE IRA Plan. DeStefano allegedly failed to forward employee payroll withholdings to participant accounts in 2006, 2007 and 2008. On April 4, 2012, the court entered a consent decree requiring DeStefano to restore $18,767.52 and permanently enjoining her from future ERISA violations. Chicago Office

Solis v. Diamond Air Freight, Inc. (S.D. Fla.)

On January 25, 2013, the Secretary filed a complaint against Diamond Air Freight, Inc. and the company's owner, Carlos R. Vimo, the fiduciaries of the company's Group Health Plan, alleging that the defendants failed to forward employee contributions to the plan between March 1, 2009 and June 30, 2009 and failed to forward employee health premiums to the company's health insurance carrier/claims administrator. The complaint seeks restitution of $13,194.58 in employee contributions and an order permanently barring Vimo from future service in any fiduciary capacity to an ERISA-covered plan. Atlanta Office

Solis v. Dombrek (N.D. Ill. and Bankr. N.D. Ill.)

On April 23, 2012, the Secretary filed a complaint in district court against John Dombek Jr., John Dombek III, the Wisconsin Tool and Stamping Company 401(k) Profit Sharing Plan and Trust, the J.D. Acquisition 401(k) Profit Sharing Plan and Trust, and the JJD Industries Group Health Plan. The complaint alleges that John Dombek III, president, fiduciary and part owner of JJD Industries, failed to remit $41,475.59 in employee contributions for premiums to health care providers for payment of claims. The complaint also alleged that over three years, Wisconsin Tool failed to remit $20,176.57 in employee contributions to the company's 401(k) profit-sharing plan, for which Dombek Jr. was a trustee, and failed to timely remit employee contributions, resulting in $6,610.09 in lost earnings. On November 28, 2012, the court issued a default judgment requiring Dombek Jr. and Dombek III to pay $22,164.45 to the Wisconsin Tool 401(k) Plan and Dombek III to pay $2,222.78 to the J.D. Acquisition 401(k) Plan and $45,134.08 to the JJD Industries Group Health Plan. The default judgment also appoints an independent fiduciary to terminate the plans and distribute their assets and bars the individuals from acting as fiduciaries to any ERISA-covered plan for five years. On October 5, 2012, the bankruptcy court issued a default judgment against Dombek Jr. ordering that his debt owed to the Wisconsin Tool 401(k) Plan is non-dischargeable. On October 16, 2012, the bankruptcy court issued a default judgment against Dombek III ordering that his debt is non-dischargeable. Chicago Office

Solis v. Elecom, Inc. (E.D. Cal.); Solis v. Mejorado (In re Mejorado) (Bankr. E.D. Cal.)

On July 19, 2012, the Secretary filed a complaint in district court, against Elecom, Inc. and Jesse Mejorado, a fiduciary to the Contractors and Employees 401(k) Plan as adopted by Elecom, Inc., alleging fiduciary breaches and seeking the recovery of plan losses established as a non-dischargeable debt through the earlier bankruptcy proceeding. On October 17, 2012, the court entered a consent judgment which found the company and Mejorado liable to the plan for approximately $16,000. Based on Mejorado's representations as to his financial status, the Secretary declined to bring a collection action against him but retains the right to fully review his financial condition on an annual basis and pursue him for the amount owed. In the earlier bankruptcy proceeding, the adversary complaint, filed on September 13, 2010, alleged that, from January 7, 2005, through October 10, 2008, Mejorado failed to remit employee contributions to the plan and, from September 2008 to December 2008, failed to collect mandatory prevailing wage contributions and remit them to the plan. As a result, the plan suffered losses of $15, 589.32. On September 30, 2010, the court entered a stipulated order of non-dischargeability, finding that the debt is non-dischargeable. San Francisco Office

Solis v. Embrenche LLC (M.D.N.C.)

On May 11, 2011, the Secretary filed a complaint against Embrenche LLC and its owners, Marty Hickman, Joe Parker and Avery Hairston, alleging that they failed to remit employee contributions to the company's 401(k) Profit Sharing Plan and failed to administer the plan after the company ceased operating. The complaint seeks an order requiring restitution of approximately $7,255 in unremitted employee contributions plus lost earnings, offsetting individual plan accounts against the losses, appointing a successor fiduciary to administer the plan and distribute its assets, and permanently enjoining the defendants from serving as fiduciaries to any ERISA-covered plan. Atlanta Office

Solis v. England (E.D. Pa.)

On December 20, 2012, the Secretary filed a complaint against Charles H. England and Charles H. England, Inc. for failure to forward employer and employee contributions to the company's SIMPLE IRA Plan from January 2007 through December 2009. The complaint seeks restoration of all losses to the plan and a permanent injunction barring the defendants from serving as ERISA fiduciaries. Philadelphia Office

Solis v. Estate of John Buckingham (D. Md.)

On December 5, 2012, the Secretary filed a complaint against the Estate of John Buckingham, Thomas Buckingham and Sun Control Systems, Inc. alleging multiple violations arising from the defendants' mismanagement of the company's Profit Sharing Plans and 401(k) Plan. John Buckingham was the plans' trustee until Thomas Buckingham succeeded him as trustee on January 21, 2010. The complaint alleges that the defendants authorized multiple withdrawals from the plans' bank accounts to pay operating expenses and repay debts incurred by Sun Control and that they failed to remit and to timely remit employee contributions. Thomas Buckingham is also liable because he failed to correct this when he became sole trustee in 2010. The complaint seeks restitution of approximately $175,000, the appointment of an independent fiduciary to manage and oversee the plans, and a permanent injunction barring Thomas Buckingham and Sun Control from serving as fiduciaries to any ERISA-covered plan. See also Solis v. Buckingham, Section B.3. Miscellaneous. Philadelphia Office

Solis v. Explore General (E.D. Cal.); Solis v. Gonzalez (In re Gonzales) (Bankr. E.D. Cal.)

On June 25, 2010, the Secretary filed a complaint against Jaime M. Gonzalez, Paul Gong and Explore General, Inc., fiduciaries of the company's 401(k) Profit Sharing Plan. The suit alleges that from, January 1, 2002 through at least March 2005, Explore General and Gonzalez failed to timely remit to the plan at least $70,000 in employee contributions. The complaint further alleges that from December 1, 2002 through at least March 2005, Explore General and Gonzalez failed to timely collect mandatory prevailing-wage contributions of approximately $200,000. Approximately $118,000 in mandatory prevailing-wage contributions remained uncollected. The complaint further alleges that all three defendants failed to administer the plan in accordance with ERISA. On October 19, 2011, the Secretary filed a motion for summary judgment, which the court granted on December 22, 2011, finding that Explore General and Gonzales were liable for $519,601.14 in plan losses, enjoining them from future fiduciary service to any ERISA-covered plan, and ordering that an independent fiduciary be appointed. On April 26, 2012, Gonzales filed for Chapter 7 bankruptcy and, on July 26, 2012, the Secretary filed an adversary complaint seeking a determination that the $519,601.14, plus lost opportunity costs due the plan, as determined by the district court proceeding, is a non-dischargeable debt. On December 20, 2012, the Secretary filed a motion for summary judgment in the bankruptcy proceeding, asserting that all the necessary elements to establish defalcation were decided in the district court action and the defendant should be precluded from re-litigating the issues. San Francisco Office

Secretary v. Family Mobile Medical Retirement Plan (N.D. Ind.)

On March 21, 2011, the Secretary filed a complaint against Ben Richmond and Family Mobile Medical Services, Inc, fiduciaries of the company's Retirement Plan, alleging that they failed to remit employee contributions to the plan between April 1, 2008 and December 31, 2008. On August 10, 2012, the court entered a consent judgment and order acknowledging that prior to the execution of the judgment, the defendants restored $4,037.18 to the plan. The judgment required restoration of $905.81 within seven days of the entry of the judgment and barred the defendants from acting as fiduciaries or service providers to any ERISA-covered plan. Chicago Office

Solis v. Fernandes (E.D. Mich.)

On January 9, 2013, the Secretary filed a complaint against Thomas Fernandes, fiduciary of the Air Gage Company 401(k) and Health Care Plans, seeking payment of employee contributions and loan repayments that not forwarded to the plans timely, if at all. The complaint seeks injunctive relief and an order requiring Fernandes to restore all losses to the plans including interest, removing Fernandes as a fiduciary, and enjoining him from being a fiduciary or service provider to any ERISA-covered plan. Cleveland Office

Solis v. First Restoration Services (W.D.N.C.)

On December 13, 2012, the Secretary filed a complaint against First Restoration Services and Frank Headen, alleging that between April 2008 and September 2008, they failed to remit $27,637.00 in employee contributions to the company's 401(k) Retirement Plan. Since the complaint was filed, some losses have been restored to the plan. In addition to restitution, the complaint seeks the appointment of an independent fiduciary and a permanent injunction barring the defendants from serving as fiduciaries to any ERISA-covered plan. Atlanta Office

Solis v. Garrison (W.D.N.C.)

On December 29, 2011, the Secretary filed a complaint against Cameron Garrison, the fiduciary of the Garrison Enterprises 401(k) Plan, for failing to remit to the plan $103,841 in employee contributions. The lawsuit seeks restitution, along with lost earnings, removal of the fiduciary, and a permanent injunction preventing him from serving as a fiduciary to any ERISA-covered plan. Since the Secretary's complaint was filed, some losses have been restored to the plan. Atlanta Office

Solis v. Gleave (In re Gleave) (Bankr. D. Ariz.)

On October 16, 2012, the Secretary filed an adversary complaint in Randall Gleave's Chapter 7 bankruptcy, alleging Gleave, as the plan trustee, committed defalcation when he failed to remit and untimely remitted approximately $25,000 in employee contributions and participant loan repayments to the Empro Professional Employer Services, LLC 401(k) Plan from January 2008 through May 2009, causing approximately $8,000 in lost opportunity costs to the plan. Gleave filed for bankruptcy on June 7, 2012. Los Angeles Office

Solis v. Griffith (N.D.N.Y.)

On June 23, 2011, the Secretary filed a complaint against Herbert Griffith, seeking restitution of $43,654.26 for employee elective contributions that Griffith failed to forward to the ITS Communications Corporation Simple IRA Plan between January 2004 and December 2008. On January 3, 2012, the court approved a consent judgment requiring Griffith to restore $56,070.87 t employee contributions and lost interest to the plan over three years, after which he will be permanently enjoined from acting as a fiduciary for any ERISA-covered plan. New York Office

Solis v. Hagstrom (D. Minn.)

On July 8, 2011, the Secretary filed a complaint against Jeff Hagstrom, Daniel Elofsom, and Mirror Factory, Inc., fiduciaries of the company's 401(k) Plan, alleging that the fiduciaries failed to remit employee salary contributions to the plan from January 1, 2006 through October 9, 2009. The Secretary is seeking restoration of approximately $14,000 to the plan. On March 5, 2012, the court entered default judgment ordering full restoration of the losses owed the plan. Chicago Office

Solis v. Hall (W.D. Wis.)

On December 23, 2011, the Secretary filed a complaint against George Hall, president of Stainless Steel Fabricating, Inc., and a fiduciary of the company's Salary Reduction Simplified Employee Pension Plan, alleging that from 2005 to 2010, Hall failed to remit $32,730 in employee contributions and untimely remitted $43,787 in employee contributions and that in 2009, Hall failed to remit employee contributions to the company's health plan or any health insurance carrier. The complaint seeks restoration of losses and a permanent injunction barring Hall from serving as a fiduciary. Resolution of this case was contingent on the sale of Stainless Steel Fabricating's assets through its Chapter 11 liquidation bankruptcy case which was filed on November 19, 2010 and closed in September 2012. The assets that were sold through the liquidation were not sufficient to restore all losses, so the civil action continues. Chicago Office

Solis v. Hardt (C.D. Cal.); Solis v. Hardt (In re Hardt) (Bankr. E.D. Cal.)

On September 21, 2010, the Secretary filed a complaint against Timothy John Hardt and Mark Dell Donne for failing to remit $18,784.44 in employee contributions to the Journey Electrical Technologies, Inc. (JET) 401(k) Plan from November 2001 through October 2007 and failing to collect $692,672.42 in mandatory prevailing wage contributions from November 2002 through February 2008. On August 31, 2010, the Secretary filed an adversary complaint in Hardt's bankruptcy, seeking a determination that the debts, plus lost opportunity costs of $55,838.05 and $140,224.45, respectively, are non-dischargeable. On October 6, 2010, the Secretary filed a motion for withdrawal of reference and transfer of venue to the Central District of California. On November 8, 2010, the parties filed a stipulation to withdraw the bankruptcy reference. The Secretary subsequently withdrew the motion to transfer venue, and the district court case was transferred to the District Court for the Eastern District of California. On May 23, 2011, in related private litigation, the court issued an order requesting that the Department file an amicus brief. In the private suit, Donne had filed a motion to dismiss, arguing that the private case should be dismissed because JET's receiver and the Department are not named parties and such parties are indispensable. Based on that motion, the court posed the question: if the ERISA claims were to move forward in the private suit, would they in any way constitute contribution in contravention of Kim v. Fujikawa (holding that ERISA cannot be read as providing for an equitable remedy of contribution in favor of a breaching fiduciary). On July 19, 2011, the Secretary filed an amicus brief based on the court's request. On September 7, 2011, the court granted in part and denied in part the motion to dismiss in the private case. The court agreed with the Secretary that the Department was not a necessary party to the private case and that a decision issued in that case would not be binding on the Department, and said that recovery in one suit would be considered in determining damages in a second suit. On May 30, 2012, the Secretary obtained a consent judgment against Donne, requiring him to restore $570,983 to the plan. Los Angeles Office

Solis v. Harlow (D. Mass.)

On January 11, 2013, the Secretary filed a complaint alleging that Warren C. Harlow and Electro-Freeto Manufacturing Co., fiduciaries of the company's SIMPLE IRA Plan, failed to remit employee contributions of approximately $6,600 to the plan from June 2008 through February 2011 when the company ceased operations. Boston Office

Solis v. Harris (D. Minn.)

On December 19, 2012, the Secretary filed a complaint against Michael Harris, fiduciary of the Faribault Woolen Mills, Inc. Fully Insured Hospital Life Welfare Plan, alleging that he failed to ensure that $55,041 in employee contributions were remitted to the plan from January 9, 2009 through March 20, 2009. Chicago Office

Solis v. Hartford Construction Group, LLC (N.D. Ga.)

On December 28, 2012, the Secretary filed a complaint against The Hartford Construction Group LLC and Travis Donnelly, alleging that they failed to forward employee contributions to the company's 401(k) Plan and Group Health Plan, resulting in 401(k) Plan losses totaling at least $3,400 and losses to Group Health Plan participants totaling about $4,905.33 plus $20,000 in denied health benefits. The complaint seeks an order requiring defendants to restore all losses, permanently barring them from serving in a fiduciary capacity to any ERISA-covered plan, and appointing a successor fiduciary to oversee the plans at the defendants' expense. Atlanta Office

Solis v. Hartmann (N.D. Ill.); In re Bruce Hartmann (Bankr. N.D. Ill)

On January 8, 2010, the Secretary filed a complaint in district court against Bruce Hartmann, alleging that he failed to disclose to his employees that their medical bills were not likely to be paid by the Health Plan sponsored by Mid-States Express, Inc., even as the company continued to take deductions from their pay for medical coverage between June 1, 2007 and July 25, 2008. Although $1.26 million in health plan contributions allegedly were withheld, $3 million in medical claims allegedly were not paid. The complaint also alleges that the fiduciaries of the company's 401(k) Plan, Bruce Hartmann and Terry Hartmann, failed to remit $65,000 in contributions and loan repayments, and failed to timely remit over $1.5 million in participant contributions and loan repayments between January 1, 2009 and February 8, 2009. The complaint seeks a court order requiring the defendants to restore all plan losses and pay employees' unpaid medical claims, removing them as fiduciaries, and permanently barring them from serving as fiduciaries or service providers to any ERISA-covered plan. On November 10, 2011, the Secretary filed a motion for partial summary judgment. On November 29, 2011, defendants filed their response to the Secretary's motion and on December 19, 2011, the Secretary filed a reply brief. On February 12, 2012, the Secretary filed an adversary complaint in the bankruptcy court against Bruce Hartmann, seeking to have Bruce Hartmann's approximately $3 million debt to the plans declared non-dischargeable. On August 31, 2012, the district court issued a fully favorable summary judgment opinion finding that the defendants had committed numerous fiduciary breaches. The parties are negotiating the relief. Chicago Office

Solis v. Harvey, Pennington Ltd. (E.D. Pa.)

On August 22, 2012, the Secretary filed a complaint against Harvey, Pennington Ltd., and plan trustees Ernest Bernabei, and Frederick Walton for failure to remit and to timely remit elective salary deferrals and loan repayments to the law firm's 401(k) Plan beginning in 2005. As of May 2012, the plan had lost nearly $100,000 as a result of caused by the alleged fiduciary violations. Prior to the filing of the complaint, the fiduciaries restored much of the amount due. The complaint seeks restoration of all remaining amounts due, the appointment of an independent fiduciary to administer and oversee the plan, and an injunction preventing the defendants from serving as fiduciaries to any ERISA-covered plan. Philadelphia Office

Solis v. HBMG, Inc. (W.D. Tex.)

On January 9, 2012, the court entered a consent judgment and order against HBMG, Inc. and Manual Zarate, the company's president, requiring defendants to restore plan losses of $65,244, terminate the plan, and authorize account distributions once all losses have been paid. The court also entered an order permanently enjoining the defendants from serving as fiduciaries to any ERISA-covered plans. The Secretary had filed a complaint on December 20, 2011, alleging that the defendants had failed to remit and to timely remit employee contributions and loan payments to the to the HBMG 401(k) Profit Sharing Plan from January 15, 2006, through December 31, 2009, and January 15, 2010, through March 21, 2011. The complaint further alleged that they failed to properly administer the plan and used plan assets to benefit themselves. Dallas Office

Solis v. Hensley Engineering Group, LLC (D.N.M.)

On November 15, 2010, the Secretary filed a complaint against Hensley Engineering Group, LLC, The Hensley Engineering Group 401(k) Plan, and Lisa Hensley, the firm's former president, for failing to forward employee contributions to the company's 401(k) Plan. Hensley was the trustee who allegedly directed the company's comptroller not to remit employee contributions of $48,528.30 from June 2007 through December 2007. After delays resulting from Hensley's incapacitation due to illness, her husband's subsequent death, the need for the appointment of a conservator for her, and then her own death, the Secretary obtained a consent judgment and order against the plan sponsor and the estate of Hensley on June 26, 2012. The consent judgment and order confirms that Hensley's breaches caused losses totaling $56,260.77 and obligates her estate to contract with a third-party administrator to effect offset of the her and her husband's plan accounts in the amount of $35,476.06 and to distribute that amount among the eight, non-fiduciary plan accounts. The order also requires her estate to process rollovers, account distributions, and the plan termination. Dallas Office

Solis v. Horning (D. Mont. and Bankr. D. Mont.)

On September 24, 2012, the Secretary filed a complaint in district court against Scott Horning, the fiduciary of the Summit Mechanical, Inc. SIMPLE IRA Plan. On January 15, 2013, the district court granted the Secretary's motion for default judgment and ordered Horning to pay $19,659.48 within 30 days of the order and enjoined Horning from violating ERISA or from serving as a fiduciary in the future for any other ERISA-covered plan. Prior to filing the civil action, the Secretary had obtained an order from the bankruptcy court on October 5, 2010, declaring Horning's $19,659.48 debt non-dischargeable. Chicago Office

Solis v. Hostetler (N.D. Ind.)

On December 28, 2011, the Secretary filed a complaint against Glen Hostetler, Julie Hostetler, and Hostetler Door, Inc., alleging that they failed to remit $21,552.07 in employee contributions and $14,885.90 in participant loan repayments and untimely remitted $117,233.18 in employee contributions and $36,557.45 in participant loan repayments. Chicago Office

Solis v. Hudec (D. Md.)

On November 19, 2012, the Secretary filed a complaint against Lisa Hudec, sole shareholder of U.S. Protect Corporation and trustee of the company's 401(k) Plan, for failure to collect employee contributions that the company failed to forward to the plan's asset custodian between January and February 2008. On November 20, 2012, the court entered a consent judgment ordering Hudec's individual account balance in the plan to be forfeited to the plan and reallocated and distributed to the other participants and barring Hudec from serving as a fiduciary to any ERISA-covered plan. Philadelphia Office

Solis v. Innovative Logistics Techniques, Inc. (E.D. Va.)

On November 11, 2012, the Secretary filed a complaint against Innovative Logistics Techniques, Inc. for failure to forward employee contributions to the company's 401(k) plan between January 2007 and April 2011, and for using plan assets to pay for fees that were unrelated to the provision of benefits under the plan and not reasonable expenses incurred in administering the plan. The complaint seeks restoration of all losses and a permanent injunction barring the company from serving as an ERISA fiduciary. See also Solis v. Innovative Logistics Techniques, Inc., Section B.3. Miscellaneous. Philadelphia Office

James E. Scott Community Association (unfiled)

The Secretary contended that the James E. Scott Community Association 403(b) Plan failed to remit employee contributions to the plan for approximately two years. The Department's investigation found that the plan fiduciaries improperly used lawfully withheld plan contributions to pay employee salaries. Dorrin Rolle and John Antieau agreed to repay the plan $98,015, and Rolle forfeited $15,892.23 and Antieau forfeited $10,509.05 from their individual plan accounts. AXA Equitable received repayment to the plan on or about May 9, 2012, with Rolle remitting $51,414.85 and Antieau remitting $46,600.86. Forty-eight plan participants were then notified that their plan accounts have been funded. Atlanta Office

Solis v. Jeffreys Seed Company (E.D.N.C.)

On December 2, 2011, the Secretary filed a complaint against Jeffreys Seed Company, its president, Edward Taylor Jeffreys, and its secretary, James T. Jeffreys III, seeking restitution of $20,324.08 in employee contributions to the former company's Group Health and Profit Sharing Plans. The complaint alleges that the defendants failed to forward employee contributions to the company's Profit Sharing Plan and failed to forward employee health premiums to the company's health insurance provider. Since the business closed in 2009, the defendants have failed to distribute the retirement plan balance of approximately $134,000 to the seven remaining participants, The complaint seeks the repayment of the unremitted contributions, lost earnings, and the appointment of an independent fiduciary to distribute the retirement plan's assets. Atlanta Office

Solis v. Jones (E.D. Mich.)

On September 8, 2011, the Secretary filed a complaint against Odell Jones, III and Cecily Hoagland, fiduciaries of the Jomar Building Company, Inc. 401(k) Plan, alleging that they failed to remit and timely remit employee salary contributions to the 401(k) Plan from January 6, 2006 to March 14, 2008. The complaint also alleges that Jones, as a fiduciary of the company's Benefit Plan, failed to remit employee health premium contributions to the Benefit Plan from January 4, 2008 through March 14, 2008. The complaint seeks the restoration of $49,279 plus lost opportunity costs to the 401(k) Plan and $1,755.47 plus lost opportunity costs to the Benefit Plan. On December 14, 2011, the court entered a consent judgment ordering Hoagland to waive all amounts she is owed and reallocate her individual account balance to restore 50 percent of the non-fiduciary loses to the 401(k) Plan and permanently enjoining her from serving as a fiduciary or service provider to any ERISA-covered plan. The case against Jones is still pending. Cleveland Office

Solis v. Joos (D. Minn. and Bankr. D. Minn.)

On October 21, 2010, the Secretary filed a complaint in district court against Susan Joos, the fiduciary of the Joos Electric Co. 401(k) Profit Sharing Plan and Trust, alleging that she failed to remit and failed to timely remit employee contributions and loan repayments to the plan from May 5, 2007 through April 23, 2010. On June 1, 2011, the district court entered a consent order and judgment requiring Joos to restore the losses to the plan, terminate the plan, and distribute the assets to the participants. On July 11, 2011, Joos filed for Chapter 7 bankruptcy protection. On September 28, 2011, the Secretary filed an adversary complaint in the bankruptcy court against Joos, seeking to have her debt to the plan declared non-dischargeable. On January 5, 2012, the bankruptcy court entered a default judgment against Joos, finding that the debt she owed the plan was non-dischargeable. Chicago Office

Solis v. Kineticsware, Inc. (W.D. Wash.); Solis v. Sampson (In re Sampson) (Bankr. W.D. Wash.)

On November 15, 2010, the Secretary filed a district court complaint against Kineticsware, Inc., Jeffrey Sampson and Richard Barnett, alleging that they failed to collect and remit to the company's 401(k) Plan $222,316 in employer contributions for plan years 2007-2008. The Secretary had filed an adversary complaint on October 26, 2009 in Sampson's Chapter 7 bankruptcy case, seeking a determination that his debt to the plan is non-dischargeable. On January 9, 2012, the court entered a consent judgment, finding that Sampson and Barnett are jointly and severally liable for $200,610 in losses due non-fiduciary participants, permanently enjoining them from future fiduciary service to any ERISA-covered plan, and requiring them to pay for the costs of an independent fiduciary to administer the plan. Seattle Office

Solis v. Kiser (E.D. Ky. and Bankr. M.D. Fla.)

On October 18, 2011, the Secretary filed a complaint against William H. Kiser, Mary Sue Kiser and their company, Irotas Manufacturing Company, LLC, the fiduciaries of the company's 401(k) Plan, alleging that they transferred $487,138.08 in plan assets to their company or vendors from June through August 2008. On September 1, 2011, the Secretary filed adversary complaints in the Kisers' individual personal bankruptcy cases alleging that their debt to the plan is non-dischargeable. On February 10, 2012, the Secretary secured default judgments in the bankruptcy cases. Also on February 10, 2012, the Secretary secured a default judgment against the Kisers and the company in the district court case, ordering them to pay to the plan $647,320.84, representing $487,138.08 transferred out of the plan and $160,182.76 in lost opportunity costs calculated through January 31, 2012, and enjoining them from violating ERISA and from serving as fiduciaries or service providers to any ERISA-covered plan. An independent fiduciary has been appointed to administer and terminate the plan. Cleveland Office

Solis v. Klein Construction Services, Inc. (N.D. Ill.)

On September 15, 2011, the Secretary filed a complaint against Klein Construction Services, Inc., Wayne Klein II, and the company's 401(k) Plan. The complaint alleges that during the period from January 19, 2007 through May 13, 2009, the fiduciaries failed to forward to the plan $23,286.88 in employee contributions and failed to timely forward $48,208.75 in employee contributions. On May 30, 2012, the court entered a consent order and judgment finding Klein and the company liable for $32,138.43 in unremitted employee contributions and lost opportunity costs, removing the defendants as fiduciaries, enjoining them from acting as fiduciaries or service providers to ERISA-covered plans, and appointing an independent fiduciary. The defendants are required to pay back plan losses over a two-year period, at the end of which the independent fiduciary will terminate the plan. Chicago Office

Solis v. L.A. Utilities, Inc. (S.D. Tex.)

On March 8, 2012, the Secretary obtained a consent judgment and order against L.A. Utilities and Stephen B. Hobbs, the company's former Chief Financial Officer, providing for full monetary and injunctive relief for their failure to ensure the timely remittance of employee contributions and loan repayments to the company's 401(k) Plan. The Secretary's complaint, filed on March 7, 2012, alleged that the defendants failed to timely forward $324,884.10 in employee contributions from January 4, 2008 through February 15, 2011. The consent order provides for Hobbs' plan account balance to be offset in the amount of $24,380.19 and allocated to 24 plan participants. An additional offset was allowed to pay the cost of making distributions, and Hobbs was permanently enjoined from serving as a fiduciary to any ERISA-covered plan and from further ERISA violations. Dallas Office

Solis v. Leal (In re Leal) (Bankr. C.D. Cal.)

On August 24, 2012, the Secretary obtained an order from the bankruptcy court, declaring that the $55,947.00 owed by Dennis Leal to the Nickson's Machine Shop 401(k) Plan is a non-dischargeable debt. From July 2006 through July 2011, Leal failed to remit and untimely remitted employee contributions and loan participant payments. Leal had filed for protection under Chapter 7 on May 2, 2012. Los Angeles Office

Solis v. Ledford (S.D. Ind. and Bankr. S.D. Ind.)

On October 27, 2011, the Secretary filed a complaint against James T. Ledford, president and owner of Davis Equipment Sales and Service, Inc., and his company, alleging that they failed to timely remit $42,285 in employee contributions to the company's Savings Incentive Match Plan for Employees IRA Plan from 2006 to 2008 and failed to remit $19,827 in employee contributions to the plan from 2008 to 2009. On July 11, 2012, the district court entered a default judgment against the defendants. On April 21, 2011, the Secretary filed an adversary complaint in bankruptcy court against Ledford seeking to have his debt to the plan declared non-dischargeable. On July 27, 2011, the bankruptcy court entered an order precluding Ledford from discharging the debt that he owes to the plan. Chicago Office

Solis v. Lensing (Bankr. E.D. Mo.)

On November 19, 2012, the Secretary filed an adversary complaint against Brian Carl Lensing, fiduciary of the Lensing Earthworks SIMPLE IRA Plan, seeking an order of non-dischargeability of debt, alleging that Lessing's failure to remit employee contributions in 2005 and 2006 resulted in plan losses of $10,174.04. On December 14, 2012, the Secretary obtained a stipulation and order of non-dischargeability of the debt, requiring Lensing to pay $500 per month to a trust account for three participants. Chicago Office

Solis v. Levy (N.D. Ind. and Bankr. N.D. Ind.)

The Secretary filed a complaint in district court on November 30, 2011 and an adversary complaint in bankruptcy court on November 21, 2011 against John Levy, a fiduciary of the Romaine, Inc. 401(k) Plan, alleging that he failed to remit and timely remit employee salary contributions and loan repayments to the plan from January 1, 2010 through April 29, 2011. The Secretary seeks to have the $11,812 debt declared non-dischargeable and to require Levy to restore $11,812 to the plan. On January 11, 2012, the bankruptcy court approved the parties' stipulation that Levy's debt is non-dischargeable. Chicago Office

Lewis M. Carter (unfiled)

On March 13, 2013, Lewis M. Carter Manufacturing Company, Inc., Lewis M. Carter, Jr., Jo Anne Lane, Jack C. Williams, Jr., and Gordon C. Carpenter signed a stipulation of settlement with the Secretary, resolving claims that they failed to adequately monitor the activities and performance of the third party responsible for forwarding and allocating plan assets and for failing to transmit $1,568.39 in lost earnings arising from employee contributions and participant loan repayments that were not timely forwarded to the company's 401(k) Plan from March 14, 2008 through March 15, 2010,. As part of the agreement, they agreed to complete a minimum of eight hours of annual fiduciary training (which they have already completed). They also agreed to prepare and implement an updated written Administrative Procedures Manual, which details the steps that will be taken to monitor the deposit of plan assets. Atlanta Office

Solis v. Life Care Hospice (N.D. Ala.)

On June 22, 2011, the Secretary filed a complaint against Life Care Hospice, Inc. and plan trustee Todd Adkison, for untimely remitting about $66,664.08 in participating employee contributions and loan repayments to the company's Retirement Trust from January 1, 2005 through December 31, 2008. The complaint also alleges that on or around April 12, 2008, Life Care completely ceased remitting employee contributions and loan repayments to the plan and that from April 12, 2008 through November 29, 2008, Life Care failed to remit about $2,284.03 in employee contributions. On June 6, 2012, the Department filed a motion for default judgment as to Adkison; the motion remains pending. Atlanta Office

Solis v. Lifecare of Alabama (N.D. Ala.)

On June 14, 2012, the Secretary filed a complaint against LifeCare of Alabama, Inc. and Susan Clingman-Banks, alleging that they failed to remit and timely remit employee contributions to the company's 401(k) Plan, causing plan losses of approximately $112,354 plus lost earnings. The complaint seeks the restitution of all losses, the appointment of an independent fiduciary to the plan, and a permanent injunction against the defendants prohibiting them from serving as fiduciaries to any ERISA-covered plan. Atlanta Office

Solis v. Louis & Riparetti, Inc. (N.D. Cal.)

On April 10, 2012, the Secretary filed a complaint against Louis & Riparetti, Inc. and Darrel Wayne Louis, alleging that, from March 2007 through September 2009, they failed to collect and remit approximately $200,000 in prevailing wage contributions, and they also failed to remit and untimely remitted employee contributions to the company's Retirement Plan, causing approximately $45,000 in plan losses, plus lost opportunity costs. San Francisco Office

Harris v. Lunsford (S.D. Ill.)

On January 31, 2013, the Secretary filed a complaint against Paul Lunsford and Lunsford Architects, Inc., fiduciaries of the company's Safe Harbor 401(k) Plan, alleging that they failed to remit $5,335.28 in employee contributions to the plan from January 1, 2008 to July 7, 2009. Chicago Office

Solis v. Masek (W.D. Mich.)

On October 23, 2012, the Secretary filed a complaint against Timothy A. Masek and Grand Craft, LLC, fiduciaries of the company's 401(k) Plan, seeking payment of employee contributions that were not forwarded to the plan timely, if at all, from January 1, 2008 to April 2009. The complaint seeks an order requiring Masek to restore all losses to the plan with interest, removing Masek as a fiduciary, enjoining him from being a fiduciary or service provider to any ERISA-covered plan, and appointing an independent fiduciary to administer the plan at the defendant's expense. Cleveland Office

Solis v. Mashali (D. Mass.)

On November 12, 2010, the Secretary filed a complaint against Dr. Fathalla Mashali, trustee of the Northern Rhode Island Anesthesia Associates, P.C., Retirement Plan and Trust, alleging that he failed to ensure that employee contributions were remitted to the plan and failed to take measures to collect employer contributions owed to the plan the 2006, 2007 and 2008 plan years, for a total of $6,632,047.40, plus interest. Mashali filed for bankruptcy protection. The Secretary filed an adversary complaint in bankruptcy court in June 2010, seeking to have the debt to the plan declared non-dischargeable. On December 22, 2010, the district court granted the Secretary's motion for withdrawal of reference and to have the adversary proceeding consolidated with the district court case. On October 17, 2011, the court granted the joint motion to appoint an independent fiduciary to administer the plan. The court also stayed discovery deadlines to permit the parties to work out a settlement that will address the amount of money to be restored as well as a strategy for ensuring that the plan remains qualified under the Internal Revenue Code, in light of complicated and poorly administered plan provisions. Boston Office

Solis v. Miles (D.S.C.)

On November 15, 2010, the Secretary filed a complaint against Perry Miles and Wappoo Service Heating & Air Conditioning for failing to remit approximately $38,749.99 in employee contributions to the company's SIMPLE IRA Plan from 2007 to 2009. On October 22, 2012, after a hearing on the Secretary's motion for default, the court entered the Secretary's proposed default judgment and order, requiring the defendants, among other things, to remit the full amount of outstanding contributions with interest to the plan, and permanently barring defendants from serving as fiduciaries to any ERISA-covered plan. Atlanta Office

Solis v. Monocacyfabs, Inc. (E.D. Pa.)

On November 7, 2011, the Secretary filed a complaint against Monocacyfabs, Inc., Michael Poole, and Jean Shipley, alleging that between January 2007 and June 2010, the company failed to remit employee contributions to the company's 401(k) Plan or remitted them late without interest and that Poole and Shipley, the co-trustees, failed to collect those contributions and amounts due the plan. On January 5, 2012, the court entered the Secretary's November 14, 2011 consent judgment ordering the defendants to restore $34,310.31 in unremitted employee contributions and interest to the plan. Philadelphia Office

Solis v. Oakes (W.D. Mich.)

On April 17, 2012, the Secretary filed a complaint against Philip Oakes and Herb's Carpet & Tile, Inc., fiduciaries of the company's SIMPLE IRA Plan, seeking payment of employee contributions that were not forwarded to the plan timely, if at all. On February 4, 2013, the court entered a default judgment against Oakes and the company, ordering Oakes to pay $6,939.10, including lost opportunity costs, to the individual plan participants. If this is not done within 10 days of the entry of the judgment, the Secretary may set off the amount owed from Oakes' individual plan account. The order also removed the defendants as fiduciaries, enjoined them from violating ERISA, and enjoined them from acting as fiduciaries or service providers to any ERISA-covered plan. Cleveland Office

Solis v. OPT, Inc. (N.D. Cal.)

On September 28, 2010, the Secretary filed a complaint against OPT, Inc., Joycelyn Tran, Jonathan Jones, and the estate of Anthony Olszewski, as fiduciaries of the company's 401(k) Profit Sharing Plan, for failing to remit to the plan $52,245.64 in employee contributions and $1,512.90 in participant loan repayments from January 2003 to June 2006. On May 10, 2012, the Secretary obtained an order from the probate court approving the estate's entering into a consent judgment to resolve the district court proceeding. On May 14, 2012, the district court entered a consent judgment requiring the estate to pay $44,608.94 to the plan, requiring Joyce Olszewski, the executor, to assign to the plan her rights to any monies collected for the estate until all plan losses and opportunity costs are restored, and requiring the appointment of an independent fiduciary with costs paid by the estate. San Francisco Office

Solis v. Owens (N.D. Ohio and Bankr. S.D. Ohio)

On June 29, 2012, the Secretary filed a complaint in the district court against David Scott Owens and his company, Advetech, Inc., seeking payment of employee contributions and loan repayments that were not forwarded to the plan timely, if at all. The complaint seeks injunctive relief and an order requiring Owens to restore all losses to the plan with interest, removing Owens as a fiduciary, enjoining him from being a fiduciary or service provider to any ERISA-covered plan, and appointing an independent fiduciary to administer the plan. On December 21, 2011, the Secretary filed an adversary complaint in the bankruptcy court, seeking to have Owens' debt declared non-dischargeable. On March 30, 2012, the Secretary and Owens filed an agreed order, entered on April 2, 2012, deeming his debt non-dischargeable. Cleveland Office

Solis v. Perlis (N.D. Ga.)

On May 24, 2012, the Secretary obtained a consent judgment against trustee Leon B. Perlis concerning the Special Dispatch 401(k) Profit Sharing Plan, resolving the claims asserted in the Secretary's complaint filed March 5, 2012. Perlis terminated the plan around the time the company closed but failed to complete the termination process by forcing out the remaining eight plan participants who had not responded to their notices of distribution. The plan assets totaled $28,276.51. As part of the consent judgment, Perils agreed to execute the necessary documents required by the fund custodian to authorize the distribution of plan assets to the remaining participants and to wind down the plan. He also agreed to be enjoined from serving as a fiduciary to any ERISA-covered plan in the future. Atlanta Office

Solis v. Powerlinx, Inc. (M.D. Fla.)

On October 16, 2012, the Secretary obtained a consent judgment against Powerlinx Inc., Michael Ambler, Douglas Bauer, and George Bernardich III, fiduciaries of the company's 401(k) Retirement Plan. The Secretary's complaint, filed on February 24, 2012, alleged that the defendants failed to remit or untimely remitted employee contributions to the plan. As part of the consent judgment, the defendants agreed to make restitution to the plan participants in the amount of $22,859.48 and agreed to be enjoined from serving as fiduciaries. Atlanta Office

Solis v. Premier Mortgage (M.D. Fla.)

On September 27, 2010, the Secretary filed a complaint against Jerry Cugno and Premier Mortgage Funding Inc., alleging that they caused about $29,605.58 in losses to the company's 401(k) plan by failing to remit employee contributions to the plan. On August 24, 2012, the court entered a consent judgment and order requiring Cugno to restore $29,605.58 to the plan, requiring him to pay for a successor fiduciary who will be appointed once the restitution is paid, and enjoining him from acting as a fiduciary to an ERISA-covered plan for five years. The Secretary also agreed not to seek collection based on Cugno's representations and documentation concerning his inability to pay, but, if Cugno's financial situation changes, or his financial information proves to be untruthful, the Secretary can pursue contempt. Atlanta Office

Solis v. Randall (S.D. Ohio and Bankr. S.D. Ohio)

On October 5, 2012, the Secretary filed a complaint in district court against Tracy S. Randall and TS Randall Company, LLC, fiduciaries of the company's Retirement Savings Plan, alleging that the fiduciaries failed to remit and timely remit employee salary contributions to the plan between Oct. 21, 2008 and July 26, 2011. On October 2, 2012, the Secretary filed an adversary complaint in bankruptcy court against Randall to have his debt to the plan declared non-dischargeable. Cleveland Office

Solis v. Ratliff, Inc. (W.D. Okla.); Solis v. Ratliff (Bankr. W.D. Okla.)

On September 5, 2012, the court entered a consent judgment and order against Ratliff, Inc. and Ralph Ratliff, ordering them to make restitution in the amount of $19,999.98, enjoining them from further violations of ERISA, and permanently barring them serving as fiduciaries. The Secretary's complaint, filed on January 27, 2012, alleging that from January 2007 through December 2008, the defendants failed to remit and untimely remitted employee contributions to the plan. Ratliff filed a petition for Chapter 7 bankruptcy, and the Secretary filed an adversary complaint on June 7, 2012. The Secretary subsequently negotiated an agreed order of non-dischargeability of debt, which the bankruptcy court entered on August 30, 2012. Dallas Office

Solis v. Red (N.D. Fla.)

On September 14, 2012, the Secretary filed a complaint against Charles Red, Jr. for failing to remit $9,485.91 in employee contributions to the Etheridge Cabinet Shop, Inc. SIMPLE IRA Plan. The company filed for Chapter 13 bankruptcy and is no longer in operation. The Secretary seeks an order restoring all plan losses, permanently enjoining the defendant from serving as a fiduciary, offsetting the defendant's plan account against the amount of losses, and appointing an independent fiduciary, if necessary, to terminate the plan and distribute its assets. Atlanta Office

Solis v. Regional Mechanical, Inc. (N.D. Cal.)

On February 1, 2012, the Secretary filed a complaint against Douglas Edward Green and Regional Mechanical, Inc., alleging that, during 2008 and half of 2009, they failed to remit to the company's 401(k) Plan salary deferrals deducted from employees' paychecks, causing about $25,000 in losses for non-fiduciary participants. On August 20, 2012, the court entered a consent judgment requiring the defendants to restore $25, 927.97 under a ten-month payment plan and to pay the section 502(l) penalty and granting the Secretary a security interest in the company's accounts receivable to secure the indebtedness to the plan. San Francisco Office

Solis v. Roetker (N.D. Ind.)

On April 26, 2012, the Secretary filed a complaint against Michael D. Roetker, fiduciary of the Edge Office Solutions Inc. Simple IRA Plan, alleging that he failed to remit $8,489.48 in employee contributions to the plan and that his failure to timely remit resulted in an additional loss of $5,508.33 in lost opportunity costs. The Secretary's filed a motion for default judgment against Roetker on July 24, 2012, and the court entered default judgment against him on July 25, 2012. Chicago Office

Solis v. Rothstein Rosenfeldt and Adler (S.D. Fla.)

On December 6, 2012, the Secretary filed a complaint against Scott Rothstein and Rothstein Rosenfeldt Adler P.A., alleging that they failed to remit employee contributions to the firm's 401(k) plan. The complaint seeks full restoration of all losses including lost earnings, a permanent injunction barring the defendants from serving as fiduciaries to any ERISA-covered plan, and the appointment of an independent fiduciary to administer the plan. Atlanta Office

Solis v. Seher (N.D. Ind.)

On August 3, 2012, the Secretary filed a complaint against Joseph Seher, Pat Mowery and Cheryl Sloan, alleging that they failed to remit $7,425.64 in employee contributions to the Accucast Technology, LLC 401(k) Plan. The complaint further alleged that Seher failed to remit $2,546.00 in employee contributions to the company's Health Plan. On August 3, 2012, the Secretary, Mowery, and Sloan, filed a consent order and judgment that recovered all monies owed to the 401(k) Plan. On October 23, 2012, the Secretary filed a motion for default judgment against Seher for the money owed to the Health Plan. On February 15, 2013, the court entered a default judgment against Seher. Chicago Office

Solis v. SEI Environmental, Inc. (M.D. Tenn.)

On July 27, 2011, the Secretary filed a complaint against SEI Environmental Inc. and its president, Wiley McAllen Finley, for failure to remit $10,717 in employee contributions and for untimely remitting about $117,274 in employee contributions to the plan between January 2007 and December 2008. On October 29, 2012, the Secretary obtained a consent judgment ordering Finley to pay $19,424.57 in restitution, permanently enjoining him from acting as a fiduciary of any ERISA-covered plan, and appointing an independent fiduciary to administer the plan. Finley also waived $14,087.93 in his plan account. Atlanta Office

Solis v. Sellner (D. Minn. and Bankr. D. Minn.)

On October 26, 2011, the Secretary filed a complaint against Tovah Sellner and Erin Sellner, fiduciaries of the Sellner Manufacturing Company, Inc., 401(k) Plan, alleging that they failed to timely remit to the plan $47,780 in employee contributions from January 10, 2008 through December 31, 2010, and failed to remit $34,755 in employee contributions from March 10, 2008 through December 24, 2009. The complaint also alleges that, as fiduciaries of the company's Health Plan, they failed to remit $13,190 in employee contributions from July 8, 2010 through September 30, 2010, and a $122 COBRA payment to the Health Plan or an insurance carrier in September 2010. On June 27, 2012, the district court entered a default judgment against the defendants. The Secretary had filed an adversary complaint in bankruptcy court against Erin Sellner on September 2, 2011, seeking to have her debts to the plans declared non-dischargeable. On January 11, 2012, a bankruptcy judge entered a default judgment precluding Erin Sellner from discharging the debts that she owed to the plans. Chicago Office

Solis v. Silicon Plains Technologies, Inc. (M.D. Fla., S.D. Iowa and Bankr. M.D. Fla.)

On February 17, 2012, the Secretary filed a complaint in the District Court for the Middle District of Florida against Greg McCormick and Silicon Plains Technologies, Inc., alleging that in 2007 and 2008, the defendants failed to forward employee withholdings and loan repayments totaling $43,998.52 to the company's 401(k) Plan. The Secretary had filed an adversary action in the bankruptcy court on January 11, 2010 and obtained a stipulation of non-dischargeability of the debt. On June 4, 2012, the District Court for the Southern District of Iowa granted the Secretary's motion to transfer venue after McCormick moved from Florida. On November 16, 2012, the court granted the Secretary's motion for default judgment and ordered the defendants to restore $43,998.52 to the plan within 30 days of the order. Chicago Office

Solis v. Singley and Associates, Inc. (E.D. Pa.)

On August 15, 2011, the Secretary filed a complaint against J.M. Singley & Associates Inc. and J. Brant Singley and Bradley Weiss, who were trustees of the company's 401(k) Plan, for failing to remit in excess of $20,000.00 in employee contributions to the company's 401(k) Plan and for untimely remitting certain contributions without interest. On March 20, 2012, the court entered a consent order and judgment requiring Singley to restore over $23,000 in unremitted contributions and lost opportunity costs to the plan and a default judgment and order finding Weiss liable for over $26,000 in plan losses, as well as the cost of an independent fiduciary. Pursuant to the court's order, an independent fiduciary was appointed, and Weiss was removed as trustee and permanently barred from serving as a fiduciary to any ERISA-covered plan. On August 8, 2012, the Secretary filed a motion for contempt against Singley for his failure to pay restitution to the plan. In October 2012, Singley died. On November 19, 2012, the Secretary filed a Statement Noting a Party's Death, informing the court of Singley's death. See also Solis v. J.M. Singley and Associates Inc., Section L. Orphan Plans and Solis v. Singley and Associates, Inc., Section M. Contempt and Subpoena Enforcement. Philadelphia Office

Solis v. Smart Technology, Inc. (E.D. Va.)

On March 14, 2012, the Secretary filed a complaint against Smart Technology, Inc. and Shawn Hedgspeth for failure to forward employee contributions to the company's 401(k) retirement plan between January 2007 and January 2009. On October 11, 2012, the court entered a default judgment in the amount of $28,712.13 and ordered the defendants to restore the losses to the plan and to take steps to terminate the plan and distribute its assets. The court further ordered that, following the termination of the plan, both defendants would be permanently enjoined from serving as trustees, fiduciaries, advisors or administrators to any ERISA-covered plan. Philadelphia Office

Solis v. Sonoran Commercial Group, L.L.C. (D. Ariz.)

On October 12, 2012, the Secretary filed a complaint against Sonoran Commercial Group, L.L.C., Kevin Tomkeil, and Margaret Phillips, alleging that, from March to December 2007, they failed to remit employee contributions to the company's 401(k) Plan and failed to collect and deposit mandatory employer contributions to the plan, causing about $26,000 in losses to the plan. In August 2011, the Secretary had obtained non-dischargeability orders in Tomkeil's and Phillips' individual Chapter 7 bankruptcies for the amount owed to the plan. Los Angeles Office

Solis v. Sophisticated Technologies, Inc. (C.D. Cal.)

On February 22, 2012, the Secretary obtained a consent judgment against Sophisticated Technologies and Moshe Klein, requiring them to pay $48,857.78 to the SophTech 401(k) Plan, pay the section 502(l) penalty, and pay the costs of an independent fiduciary. The Secretary's complaint, filed on November 15, 2010, alleged that, between January 2001 and 2003, Klein and the company failed to remit to the plan $26,825 in salary deferrals deducted from employees' paychecks. San Francisco Office

Solis v. Southeastern Materials (M.D.N.C.)

On October 15, 2012, the Secretary filed a complaint against now-defunct Southeastern Materials, Inc., and fiduciaries Tony M. Dennis, Betty Lambert, and Maria Meyers, alleging that the company, Dennis, and Lambert failed to remit employee contributions and loan repayments to the company's 401(k) Plan. Dennis, Lambert, and Meyers also allegedly failed to remit employee contributions for health insurance premiums to the company's Flexible Benefit Plan, resulting in the termination of the health plan and unpaid health claims of at least $46,661.39. The complaint seeks a court order requiring the defendants to restore all plan losses, including lost earnings, offsetting their claims to plan assets against losses, appointing an independent fiduciary to terminate the plans and distribute the assets, and permanently enjoining the defendants from serving as fiduciaries to any ERISA-covered plan. Atlanta Office

Solisv. Spencer (S.D. Ohio and Bankr. S.D. Ohio)

On August 21, 2012, the Secretary filed a complaint in district court against Bruce Spencer, Tannile Ortiz, and Paul Olzeski, fiduciaries of the Spencer & Associates, LLC Profit Sharing and 401(k) Plan, alleging that they failed to remit and timely remit employee contributions between March 7, 2008 and July 11, 2010 and that Spencer terminated the plan and took approximately $34,000 in plan assets, which he did not distribute to participants. On January 25, 2013, the district court entered a default judgment against Ortiz, ordering her to restore about $7,000 to participants and waiving an additional $4,321, which she was owed. On January 26, 2012, the Secretary filed an adversary complaint against Spencer in bankruptcy court to have his debts to the plan declared non-dischargeable. On April 17, 2012, the bankruptcy court entered a default judgment declaring Spencer's debt non-dischargeable. Cleveland Office

Solis v. Stuart (C.D. Cal.)

On August 5, 2011, the Secretary filed a complaint against Shannon Stuart, S.J. Burkhardt, Inc., SJB Group, Inc. and the SJB 401(k) Plan, alleging that the fiduciaries failed to exercise their authority to appoint someone with the responsibility to collect outstanding mandatory employer/prevailing wage contributions or to take any action that would result in the collection of approximately $291,236 in mandatory employer/prevailing wage contributions due the plan for the period beginning September 2007 and ending September 2008. On January 18, 2013, the Secretary obtained a consent judgment requiring Stuart to pay approximately $10,000 for an independent fiduciary to terminate the 401(k) plan and distribute its assets. See also Solis v. Stuart; Solis v. Schmitz (In re Schmitz), Section D. Prudence. Los Angeles Office

Solis v. Tele-Optics of Nashville (M.D. Tenn.)

On December 27, 2012, the Secretary filed a complaint against Tele-Optics of Nashville, Inc and its president, Joseph Grills, for failing to remit employee contributions to the company's 401(k) and Group Health Plans. When the company began experiencing financial difficulties in 2009, it ceased forwarding employee contributions to its 401(k) Plan. Health insurance coverage was terminated in June 2011, but the company continued to withhold employee contributions from the Group Health Plan. The company declared bankruptcy in 2012. The Secretary seeks to recover about $32,000 in unremitted contributions and lost earnings and to enjoin Grills from serving as a fiduciary to any ERISA-covered plan. Atlanta Office

Solis v. Themescapes, Inc. (D. Minn.)

On October 26, 2011, the Secretary filed a complaint against Themescapes, Inc. and its owners, Peter Nasvick, Anthony Nasvik, Margaret Nasvik and Peter O. Nasvick, fiduciaries of the company's 401(k) Plan, alleging that they failed to remit $57,146.51 in employee contributions to the plan from August 15, 2008 through April 23, 2010. On February 13, 2012, the court entered a consent order and judgment requiring the defendants to pay $101,248 to the plan. Chicago Office

Solis v. Thinkstream, Inc. (M.D. La.)

On September 5, 2012, the court entered a judgment against Barry L. Bellue, Sr. and Thinkstream, Inc., ordering them to pay $120,000, including lost earnings, to the company's 401(k) Plan to make the participants whole. The court enjoined the defendants from violating ERISA and from acting as fiduciaries or representatives to any other ERISA-covered plan and ordered Bellue to complete no less than eight hours of fiduciary education before January 1, 2013. The complaint, filed on May 31, 2012, alleged that Bellue, the plan's trustee and the company's president and chief executive officer, failed to remit to the plan employee contributions of $81,047.07 from January 2003 through December 2005. Dallas Office

Solis v. Towson Rehabilitation Center, LLC (D. Md.)

On January 11, 2012, the Secretary filed a complaint against Towson Rehabilitation Center, LLC and Howard Neels for allegedly failing to timely forward employee contributions to the company's 401(k) retirement plan beginning in January 2006. On January 18, 2013, the court entered a consent judgment that requires the defendants to restore $29,167.75 to the plan as restitution, removes the company as the plan administrator, appoints an independent fiduciary to oversee and manage the plan, and bars the defendants from serving as fiduciaries to any ERISA-covered plan. Philadelphia Office

Solis v. Tradition (W.D.N.C.)

On January 25, 2013, the Secretary filed a complaint against Tradition, LLC and Keith Vinson, the company's president and plan trustee, for allegedly failing to remit at least $10,944.88 in employee contributions and $6,099.18 in COBRA payments to the company's Group Health Plan from October 24, 2009 through March 24, 2010, resulting in unpaid medical claims of at least $64,461.89. The complaint seeks a court order requiring the defendants to restore all losses, including any lost earnings, requiring that any of the individual fiduciary's claims to plan assets be offset against the losses, appointing an independent fiduciary, and permanently enjoining the defendants from serving as fiduciaries to any ERISA-covered plan. Atlanta Office

Solis v. Tricad (N.D. Ind.)

On December 21, 2011, the Secretary filed a complaint alleging that John Smith II, fiduciary of the Tricad, Inc. 401(k) Plan, failed to remit contributions to the plan and untimely remitted employee contributions from January 6, 2006 through May 31, 2008. On June 14, 2012, the Secretary obtained a default judgment against Smith, ordering him to pay the plan $16,985.77 and enjoining him from serving as a fiduciary or service provider to any ERISA-covered plan. Chicago Office

Solis v. Triple T Construction, Inc. (M.D. Fla.)

On November 15, 2010, the Secretary filed a complaint against Triple T Construction, Inc. and George Thompson III, seeking restoration of losses arising from employee contributions not remitted and untimely remitted to the company's 401(k) Plan. On May 21, 2012, the Secretary obtained a consent judgment, requiring the defendants to pay $4,000.80 in restitution, appointing an independent fiduciary to administer the plan, barring Thompson from serving as a fiduciary for five years, and requiring him to complete 40 hours of fiduciary education prior to serving as a fiduciary and four hours of fiduciary education for each year that he serves as a fiduciary. Atlanta Office

Solis v. Tripp Mechanical (E.D.N.C.)

On January 17, 2013, the Secretary filed a complaint against Tripp Mechanical Services, its owner, Jarvis Edward Tripp, Jr., and its office manager, Gina Tripp, alleging that they failed to remit employee contributions to the company's SIMPLE IRA Plan. The complaint seeks the repayment of the unremitted contributions, lost earnings, and a permanent injunction enjoining the defendants from acting as fiduciaries to any ERISA-covered plan. Atlanta Office

Solis v. Trotter (S.D. Ind.)

On June 29, 2011, the Secretary filed a complaint against James H. Trotter, Sr., Sylvia Trotter, Trotter Construction Company, Inc. and the Trotter Development Group, NC, LLC, fiduciaries of the Trotter Construction Company 401(k) Plan and the Trotter Group Health Plans, for failure to remit and timely remit employee contributions and loan repayments to the 401(k) Plan and failure to remit employee contributions to the Health Plan. On July 18, 2012, the court entered a consent order and judgment directing the defendants to restore $19,236.33 to the Health Plan for the period December 22, 2008 through December 31, 2009 and enjoining the Trotters from serving as fiduciaries or service providers with respect to any ERISA-covered plans. The consent judgment acknowledged that the defendants already had restored $16,705.99 to the 401(k) Plan for January 1, 2004 through May 15, 2009. Chicago Office

Solis v. Wagner (N.D. Ill.)

On June 21, 2011, the Secretary filed a complaint against Joseph Wagner and Thomas Eppers, the fiduciaries of Dowe and Wagner, Inc. 401(k) Plan, alleging that they failed to remit and timely remit employee salary contributions to the plan between October 2006 and July 2009. On March 12, 2012, the court entered a consent judgment, confirming that the fiduciaries had made a payment of $6,000 to the plan and requiring them to restore more than $26,000 to the plan. Chicago Office

Solis v. Wallis (N.D. Ill. and Bankr. N.D. Ill.)

On May 6, 2011, the Secretary filed a complaint in the district court against Scott Wallis, Ronald Eriksen, and USA Baby, Inc., the fiduciaries of the company's 401(k) Plan and Health Plan, alleging that they failed to ensure that employee contributions and loan repayments were remitted and timely remitted to the 401(k) Plan and failed to ensure that participant contributions were remitted to the Health Plan. On October 14, 2011, the Secretary filed an adversary complaint to have the amounts owed to the 401(k) Plan deemed non-dischargeable in Eriksen's bankruptcy. On June 15, 2012, the bankruptcy court ordered that Eriksen's debt to the plan was non-dischargeable based on the debtor's signed stipulation with the Secretary. Chicago Office

Solis v. Walsh (S.D. Fla.)

On November 10, 2010, the Secretary filed a complaint against Daniel Walsh, David Harris, Stephen Pallister, and Windjammer Barefoot Cruises, Ltd., as plan fiduciaries, for failure to remit employee contributions and employee loan payments to the company's 401(k) Plan. They allegedly failed to remit approximately $19,180.70 in employee contributions and $4,696.99 in employee loan payments to the plan in 2006 and 2007. On August 9, 2011, the Secretary filed a motion for clerk's default against Daniel Walsh and Windjammer, which the clerk entered on August 22, 2011. On August 24, 2011, Daniel Walsh filed a late answer. On September 13, 2011, the Secretary filed a motion to strike the late answer and for a final default judgment. On September 29, 2011, Walsh responded with a motion to vacate default. On November 28, 2011, the court denied the Secretary's motion to strike the late answer and for a final judgment against Walsh but granted the motion for final judgment against Windjammer, an inactive Florida corporation. After discovery, the Secretary obtained a consent judgment and order requiring Daniel Walsh to assist in and facilitate distributions of plan assets to participants. Even after Walsh's efforts, however, the plan still had 23 participants with account balances totaling $151,386.62, so the parties submitted a consent motion for the court to reopen the case and appoint a successor fiduciary. The court entered this order on October 12, 2012, and a successor fiduciary was appointed. Atlanta Office

Solis v. Weir (W.D. Pa.)

On December 21, 2011, the Secretary filed a motion for contempt against Kevin T. Weir and Liberty-Pittsburgh Systems, Inc. for failure to comply with a consent judgment, entered in August 2011, requiring the defendants to make full restitution of $67,137.67 to the company's 401(k) plan through a series of six payments. The court issued a show cause order to the defendants and a hearing was scheduled for January 23, 2012. The consent judgment settled charges in the Secretary's complaint, filed on February 3, 2011, alleging that the company and Weir, a former officer of the company and a plan fiduciary, failed to remit to the plan certain employee contributions and employee loan repayments during January 2007 to December 2009. The consent judgment also permanently enjoined Weir and the company from acting as fiduciaries and provided for the plan to be terminated. At the January 23, 2012 show cause hearing, the company claimed that it could not comply with the terms of the consent judgment because it did not have sufficient funds. The court required the company to provide the Secretary with documentation demonstrating its financial condition, which it did. The Secretary also obtained financial information regarding Weir, who also claimed that he was unable to repay the plan, despite having entered into the consent agreement in August 2011. Weir and the Secretary agreed to enter into a modified consent judgment which required Weir to repay to the plan not less than $1,000 per month and report to the Secretary his income during the payout period. On June 21, 2012, the court entered the modified consent judgment and on June 22, 2012, the Secretary withdrew the contempt motion. The Secretary also filed judgment liens on property in the name of the company and Weir. An independent fiduciary is serving as the plan administrator for the purposes of terminating the plan and distributing the recovered assets. See also Solis v. Weir, Section M. Contempt and Subpoena Enforcement. Philadelphia Office

Solis v. Yanek (E.D. Va.)

On January 4, 2013, the Secretary filed a complaint against Richard Yanek and Cardservice of Virginia, Inc. for failure to remit and to timely remit employee contributions and participant loan repayments to the company's 401(k) retirement plan from 2007 through 2011. A consent judgment was filed simultaneously with the complaint. On January 9, 2013, the court entered the consent judgment, which appoints an independent fiduciary at the defendants' expense, orders the defendants to pay restitution to the plan in excess of $70,000, and bars them from serving as fiduciaries to any ERISA-covered plan in the future. Philadelphia Office

Solis v. Zucker (N.D. Ohio and Bankr. S.D. Ohio)

On October 6, 2011, the Secretary filed a complaint against Glen Zucker and Truprint Services, Inc. d.b.a. Grant Saint John, fiduciaries of the Grant Saint John 401(k) Profit Sharing Plan, alleging that from January 10, 2007 to June 10, 2008, they failed to remit or untimely remitted employee contributions and loan repayments to the plan. On April 27, 2012, the district court entered a consent order and judgment, ordering Zucker to make installment payments to repay $8,287.12 to the plan and enjoining the defendants from violating ERISA and from being fiduciaries or service providers to ERISA-covered plans. According to the consent order, if Truprint files for bankruptcy, its debt to the plan will be deemed non-dischargeable. An independent fiduciary will be appointed to terminate the plan. On July 20, 2012, the Secretary filed an adversary complaint in Zucker's personal bankruptcy case, and on September 5, 2012, Zucker's debt was deemed non-dischargeable. Cleveland Office

2.    Insurance Rebates

Secretary v. Source HR, LLC (E.D. Mich.)

On May 31, 2012, the Secretary filed a complaint against Source HR, LLC, a professional employer organization that was the administrator of its own plan and plans of its client employers, and Austin R. Ritter, its owner and president. The complaint alleged that from May 1, 2007 through March 30, 2011, Ritter received a $20,784.47 in prohibited insurance commission income from insurance carriers that provided coverage for the plans. Ritter allegedly negotiated an increase in commissions in order to increase his income, resulting in higher premium payments from participants. On January 4, 2013, the court entered the parties' consent judgment, requiring Source HR to repay $24,062.25 in insurance commissions and lost opportunity costs to the affected plans and permanently enjoining the defendants from serving as fiduciaries or service providers to ERISA-covered plans. Chicago Office

3.    Miscellaneous

Compass Capital Partners, Ltd. Defined Benefit Retirement Plan (E.D. Pa.)

On July 15, 2011 the Secretary filed a complaint against Harris DeWese, Compass Capital Partners, Ltd., and the company's Defined Benefit Retirement Plan, alleging that from October 2006 to October 2007, DeWese, as plan trustee and the company's owner and chief executive officer, transferred over $500,000.00 from the plan to himself, Compass Capital, and another company in which he had an interest. On November 3, 2011, the clerk of the court entered default. On January 13, 2012, the Secretary filed a motion for summary judgment, which the court granted on February 13, 2012. It ordered restitution of more than $500,000, appointment of an independent fiduciary, and other injunctive relief. The defendants failed to pay the judgment, and the Secretary filed judgment liens on DeWese's property. Philadelphia Office

In re Cottone (Cougar Packaging) (Bankr. N.D. Ill.)

On October 11, 2012, the Secretary filed an adversary complaint against Mark Cottone alleging that approximately $255,000 in improper transfers to himself or Cougar Packaging was a non-dischargeable debt owed to the company's Profit Sharing Plan. On November 29, 2012, the debtor filed a motion to dismiss, to which the Secretary responded on December 20, 2012. On January 23, 2013, the court denied the motion to dismiss. Chicago Office

Solis v. Davis (N.D. Ill.)

On October 4, 2011, the Secretary filed a complaint against Keith Davis and A.B.D. Tank & Pump Co., fiduciaries of the company's 401(k) & Profit Sharing Plan & Trust, alleging that between December 2006 and November 2010, they misappropriated in excess of $1.9 million from the plan. The complaint requests that the court order the fiduciaries to restore all plan assets, plus lost opportunity costs, remove the defendants as fiduciaries, enjoin them from serving as fiduciaries or service providers to any ERISA-covered plan, and appoint an independent fiduciary to administer and terminate the plan. On August 30, 2012, the court entered a default judgment against the company, requiring it to restore more than $2.7 million to the plan. Chicago Office

Solis v. Eichholz Law Firm, P.C. (S.D. Ga.)

On July 14, 2010, the Secretary filed a complaint against the Eichholz Law Firm, P.C. and Benjamin Eichholz to recover losses to the firm's Retirement Plan and Employees Pension Plan arising from numerous prohibited transactions and imprudent investments of the plans' assets in highly speculative stocks. Eichholz allegedly moved plan assets to his law firm accounts and lent or transferred the funds to others, including former clients and employees, his girlfriend (now wife), and businesses he owned or in which he personally invested. As a result of a concurrent criminal investigation, Eichholz pled guilty to one count of obstructing the Department's investigation and was sentenced to 21 months in prison. On September 27, 2010, the defendants filed a motion to dismiss, which the court denied, followed by a motion for reconsideration, which the court also denied. The defendants filed their answer on March 31, 2011. The parties participated in voluntary mediation before the magistrate judge on June 22, 2011 and reached a favorable resolution that has been incorporated into a consent judgment, restoring all losses to the plan. The settlement of $266,073 was adjusted for distributions made to some participants and will be further reduced once plan assets at banks and the restitution from the criminal case are marshaled. Eichholz and his mother waived their right to these benefits and were allowed to keep any remaining assets in the plan (e.g., penny stocks and china). On December 13, 2012, the court entered a consent judgment requiring defendants to restore $15,053.10 to the plan by December 20, 2012, to remit a $10,000 retainer to a court-appointed independent fiduciary, and to turn over to the independent fiduciary plan funds at two financial institutions by December 31, 2012. The consent judgment also permanently bars the defendants from serving as a fiduciary, trustee, or service provider to any ERISA-covered plan and permanently enjoins them from violating ERISA. Atlanta Office

Solis v. Estate of John Buckingham (D. Md.)

On December 5, 2012, the Secretary filed a complaint against the Estate of John Buckingham, Thomas Buckingham and Sun Control Systems, Inc., alleging mismanagement of the company's Profit Sharing and 401(k) Plans. John Buckingham was the plans' trustee until Thomas Buckingham succeeded him in 2010. The complaint alleges that the defendants authorized multiple withdrawals from the plans' bank accounts to pay operation expenses and repay debts incurred by Sun Control and that they failed to remit and to timely remit employee contributions. Thomas Buckingham is also liable because he failed to correct this when he became sole trustee in 2010. The complaint seeks restitution of about $175,000, appointment of an independent fiduciary to manage and oversee the plans, and a permanent injunction barring Thomas Buckingham and Sun Control from serving as fiduciaries to any ERISA-covered plan. See also Solis v. Buckingham, Section B.1. Collection of Plan Contributions. Philadelphia Office

In re Glasgow; Solis v. Glasgow (Bankr. D.N.H.)

On October 7, 2011, the Secretary filed an adversary complaint seeking to have a $39,942.53 debt determined to be non-dischargeable in a Chapter 7 bankruptcy proceeding involving an individual who served as president of the plan sponsor, Big Bad, Inc., and is the trustee of the company's 401(k) Retirement Plan. The Secretary alleges that employee salary withholdings were never forwarded to the plan. Following settlement discussions, the Secretary filed an assented-to motion on May 14, 2012, to approve the parties' stipulation that Glasgow's $44,105.58 debt to the plan was non-dischargeable. The bankruptcy court approved the motion and entered a final judgment on May 16, 2012. Glasgow agreed to an offset of his account to make all participants whole. Boston Office

Solis v. Hofmeister (E.D. Ky.)

On August 9, 2012, the Secretary filed a complaint against George Hofmeister, Bernard Tew, Tew Enterprises, LLC, Bluegrass Investment Management, LLC, Metavation, LLC, and MIDS, LLC. The complaint alleges that Hofmeister, as trustee of the Hillsdale Salaried Pension Plan and the Hillsdale Hourly Pension Plan, engaged in a series of prohibited transactions and imprudent actions, including loans to companies affiliated with Hofmeister, use of plan assets for the purchase and lease of employer property of a company affiliated with Hofmeister, purchase of customer notes from companies affiliated with Hofmeister, and the improper allocation of income and expense payments between the pension plans. The complaint further alleges that Bernard Tew, Tew Enterprises, LLC, and Bluegrass Investment Management, LLC, who served as investment advisors to the plans, approved many of the prohibited transactions and were paid excessive fees for their services. Cleveland and Chicago Offices

Solis v. Horizon Medical Group (M.D. Fla.)

On August 9, 2011, the Secretary filed a complaint against Horizon Medical Group and its president and plan trustee, Daniel Branch, alleging that he used the funds remaining in the company's 401(k) Profit Sharing Plan to attempt to keep the company in business, even as it faced multiple lawsuits, including a $3.8 million judgment in a suit brought by one of its vendors. Branch allegedly refused to distribute plan balances to several individuals and officers of the company and transferred plan assets to one of his solely owned side businesses, and then to another side business, before distributing some of that amount to a few participants. A consent judgment, entered on December 11, 2012, requires Branch to return all undistributed plan funds, including lost interest, to nine participants for a total recovery of $183,500 and permanently enjoins him from serving as a fiduciary to an ERISA-covered plan. Atlanta Office

Solis v. Innovative Logistics Techniques, Inc. (E.D. Va.)

On November 11, 2012, the Secretary filed a complaint against Innovative Logistics Techniques, Inc. for failure to forward employee contributions to the company's 401(k) plan between January 2007 and April 2011, and for using plan assets to pay for fees that were unrelated to the provision of benefits under the plan and not reasonable expenses incurred in administering the plan. The complaint seeks restoration of all losses and a permanent injunction barring the company from serving as an ERISA fiduciary. See also Solis v. Innovative Logistics Techniques, Inc., B.1. Collection of Plan Contributions. Philadelphia Office

Solis v. Kreeger (W.D. Wis.)

On February 28, 2011, the Secretary filed a complaint against Joseph Kreeger and Coin Builders LLC, fiduciaries of the company's Profit Sharing Plan and Trust, alleging that they engaged in prohibited transactions when they used plan assets for non-plan purposes. In July and August 2004, Kreeger withdrew a total of $1.3 million from the plan account and deposited it into the company's account. Kreeger claimed that the monies were loans to plan participants who purchased real property in Las Vegas. Kreeger held interests in both pieces of property prior to the alleged loans to the plan participants. On August 24, 2011, the court entered a default judgment against the defendants, ordering the restoration of $1.5 million to the plan and the barring the defendants from serving as fiduciaries or service providers to ERISA-covered plans. On April 3, 2012, at the Secretary's request, the court appointed an independent fiduciary to ensure that a monetary claim the plan had in Nevada would be made. Chicago Office

Solis v. Lippmann (Bankr. Utah)

On October 5, 2012, the Secretary filed an adversary complaint in Kenneth Lippman's Chapter 11 bankruptcy proceeding, alleging that Lippmann, trustee of the Hi-Grade Meats, Inc. Profit Sharing Plan, committed defalcation under the Bankruptcy Code when, from 2004 to 2011, he caused the plan to engage in a series of prohibited transactions by lending the $1.3 million of the plan's assets to himself and the company. Although Lippmann caused the full repayment of those prohibited loans, the company repaid up to $174,034.53 within 90 days of the company's Chapter 11 bankruptcy filing. Accordingly, up to $174,034.53 in payments back to the plan are at risk of being voided (voidable preference) and returned to the company's bankruptcy estate. The adversary complaint alleges that, to the extent such amount is reclaimed by the company's bankruptcy estate, such amount should be declared a non-dischargeable debt in Lippmann's personal bankruptcy. On October 16, 2012, the bankruptcy court entered a stipulated judgment, ordering that if the Secretary can obtain a judgment against Lippmann based on those allegations, the resulting debt would be non-dischargeable. San Francisco Office

Solis v. Mordo (S.D.N.Y.)

On November 23, 2010, the Secretary filed a complaint against Colette Mordo, trustee of the Sadimara Knitwear, Inc. and the Stallion Knits, Ltd. Defined Benefit Pension Plans, in connection with the unexplained transfer of over $4 million to parties in interest, including members of the Mordo family and companies owned by them. Despite a commitment on the record to enter into a consent judgment substantially resolving the case, Mordo ultimately refused to sign the proposed consent judgment and opted to continue the litigation, moving for a jury trial. The jury trial request was defeated by the Secretary's opposition brief, which argued that Cigna v. Amara had strengthened existing precedents denying jury trials for ERISA claims seeking equitable relief. The parties are engaged in discovery and are concurrently working to resolve the lawsuit through a consent judgment agreement. The parties are scheduled to appear before the court for a status conference on March 28, 2013. New York Office

Solis v. N.C. Caro, M.D. (N.D. Ill. and Bankr. N.D. Ill.)

On September 30, 2011, the Secretary filed a complaint in district court against Nicholas C. Caro, N.C. Caro M.D., S.C., and the company's Defined Benefit Plan. The complaint alleges that from April 27, 2006, through February 29, 2008, Caro liquidated in excess of $263,951 from the plan's investment accounts and transferred those funds to various accounts held by Caro, his wife's company, and others. The complaint seeks restoration of losses to the plan and the appointment of an independent fiduciary to distribute the assets and terminate the plan. On October 13, 2011, the Secretary filed an adversary complaint against Caro, seeking a determination that the debts to the plan are non-dischargeable. On September 25, 2012, Caro, acting pro se, filed a motion for partial summary judgment on a statute of limitations defense. The Secretary filed a cross motion on October 23, 2012. On November 29, 2012, the district court denied Caro's motion and granted the Secretary's cross motion for partial summary judgment. On November 15, 2012, Caro was criminally indicted on charges of mail fraud and embezzlement from an employee benefit plan. On December 18, 2012, the court granted Caro's motion to stay the civil proceedings because of his criminal indictment; a status hearing is set for April 17, 2013. The adversary proceeding in the bankruptcy court was stayed on April 26, 2012, because of the district court action; a status hearing is set for April 24, 2013. Chicago Office

Solis v. Palmer (N.D.N.Y.)

On June 28, 2012, the Secretary filed a complaint against James Palmer and the James Palmer Associates, Inc. Employees Profit Sharing Plan and Trust, alleging that Palmer unlawfully transferred $95,000.00 in plan assets to the company and to Susan Cotton, a co-trustee. On September 24, 2012, the clerk of the court entered Palmer's default for failure to answer the complaint or otherwise appear. On October 23, 2012, the Secretary moved for a default judgment. Palmer filed a response to the motion, in which he stated that some monies had been repaid to the plan and that there was a dispute concerning the money owed to one participant. The Secretary replied that in light of Palmer's statements, the appropriate relief would be to require Palmer to conduct an accounting of plan assets and to appoint an independent fiduciary to determine the correct amounts owed to plan participants. New York Office

Solis v. Sempre (In re Sempre) (Bankr. C.D. Cal.)

On January 7, 2013, the court entered an order approving a stipulation of non-dischargeability in John Sempre's Chapter 7 bankruptcy proceeding. The stipulation alleges that Sempre withdrew $1,549,141.87 from the Southwood Pharmaceuticals, Inc. Defined Benefit Plan in October 2007 and used that money to pay the company's expenses. The stipulation found that amounts due non-fiduciary participants were non-dischargeable and also requires payment of penalties under ERISA section 502(l). Sempre filed for bankruptcy on March 2, 2012. Los Angeles Office

Solis v. Sipes (E.D. Mich.)

On November 30, 2012, the Secretary filed a complaint against Bennett Sipes and Brian Kirshner, fiduciaries of the First Profit Sharing Plan of Sunset Heating & Cooling, Inc. The complaint alleges that Kirshner, the sole trustee, failed to take any action to administer the plan following the plan sponsor's dissolution over five years earlier. It further alleges that Sipes, an officer and co-owner of the plan sponsor, appointed himself successor trustee and withdrew money from the plan, improperly distributed plan assets to himself and others, and imprudently held plan assets in the form of cash. Cleveland Office

Solis v. Tomco Auto Parts, Inc. (C.D. Cal.); Solis v. Schoenfeld (In re Schoenfeld) (Bankr. C.D. Cal.)

On January 13, 2012, the Secretary filed a complaint against Tomco Auto Parts, Inc. and Richard Alan Schoenfeld,, and on January 17, 2012, the Secretary filed an adversary complaint in Schoenfeld's Chapter 13 bankruptcy. The complaints allege that, between October and November 2004, Schoenfeld, as trustee of the company's ESOP, authorized improper withdrawals of $197,000 from the ESOP, $47,000 of which was never repaid. On January 27, 2012, the Secretary filed a motion to withdraw the bankruptcy reference and to remove the action to district court. On April 25, 2012, over Schoenfeld's objection, the court removed the matter to district court. The district court granted the Secretary's motions to strike Schoenfeld's affirmative defenses, including claims of contribution, failure to name all indispensible parties and other inappropriate defenses, and denied his jury demand. On September 17, 2012, Schoenfeld filed a motion for partial summary judgment, arguing, among other things, that he was not liable for any losses because a settlement agreement between the defunct company and a successor addressed the liability and, as a matter of law, defalcation cannot be found. On September 26, 2012, the Secretary opposed the motion, and on October 29, 2012, the court denied Schoenfeld's motion. On October 26, 2012, the Secretary filed her own motion for summary judgment on all claims, and on January 31, 2012, the court granted the Secretary's motion, finding that Schoenfeld breached his fiduciary duties and committed defalcation, rendering the debt non-dischargeable. The court also imposed injunctive relief, including requiring Schoenfeld to pay all costs of an independent fiduciary to terminate the plan and distribute its assets. Los Angeles Office

Solis v. Waters (N.D. Ill.)

On October 15, 2012, the Secretary filed a complaint against fiduciaries Gary Waters, Sandra Waters, and Customwood Stairs, Inc. for failing to remit and timely remit employee contributions to the company's Employee Savings Plan from January 5, 2007 through February 21, 2011. The complaint also alleged that the fiduciaries permitted prohibited loans. The losses attributed to the fiduciary breaches are estimated to total $122,000. Chicago Office

Solis v. Weiss (E.D.N.Y)

On January 17, 2012, the Secretary filed a complaint against Gary Weiss and the Marvin Knitting Mills, Inc. Profit Sharing Plan, alleging that Weiss unlawfully transferred and loaned $735,436.03 in plan assets to himself, his company, Marvin Knitting Mills, Inc., and a plan participant. None of the money has been repaid to the plan. As of December 31, 2010, the plan had $3,638.81 in assets. On June 11, 2012, the clerk of the court entered Weiss' default. The Secretary filed a motion for a default judgment on October 22, 2012. New York Office

Solis v. Western Mixers (C.D. Cal.)

On May 1, 2012, the Secretary obtained a consent judgment against Western Mixers, Inc., Frank Rudy, David H. Bolstad, and Robert Fischer. The consent judgment requires the defendants to pay to the plan a total of $802,901.07, with Bolstad forfeiting his $508,161.75 account balance plus paying an additional $122,516.40, Fischer forfeiting his entire account balance of $152,222.92, and Rudy forfeiting $20,000 of his account balance. The defendants also are required to pay the costs of an independent fiduciary and the ERISA section 502(l) penalty. On May 1, 2012, Fischer filed a motion to set aside the consent judgment, arguing that his attorneys were conflicted and committed negligence and, as a result, he was not fully aware of the terms of the consent judgment and its consequences. On December 13, 2012, the court refused to set aside the judgment, rejecting Fischer's arguments and, finding that Fischer could simply have declined to sign the judgment and hired his own attorney. The consent judgment settled charges in a complaint filed on August 31, 2011, alleging that the defendants caused prohibited transfers and failed to collect approximately mandatory employer contributions from 2001 through 2004. On November 17, 2011, over the Department's objection, the court consolidated the Secretary's complaint with existing private litigation initiated by Frank Rudy. Los Angeles Office

Solis v. Williams (N.D. Cal.)

On January 8, 2013, the Secretary filed a motion to appoint an independent fiduciary to distribute the remaining assets of the Power and Data Technology, Inc 401(k) Profit Sharing Plan. On December 18, 2008, the Secretary filed a complaint against Michael Williams, who abandoned the plan on or about October 2002. He allegedly withdrew about $36,000 in plan assets for his personal use and allowed about $3,000 in plan assets to escheat from a savings account to the State of California. The clerk entered default judgment on August 27, 2009. Williams moved to set aside the entry of default and, on December 16, 2009, the court denied his motion. San Francisco Office

C.    Financing the Union

Solis v. McNamee (S.D.N.Y.)

On February 29, 2012, the Secretary filed a complaint against John V. McNamee, Jr., Kevin Dunphy, Manuel Farina, John Hall, John Hamilton, Michele Sullivan, and John Walsh, who are the trustees of the pension plan, annuity fund, and vacation fund of Exhibition Employees Local 829 of the International Association of Theatrical Stage Employees. The complaint alleges that the defendants have been engaging in prohibited transactions between 2006 and the present, including the improper transfer of over $2.9 million in assets from Local 829's pension plan to the union and its annuity, vacation and hiring hall funds, and the improper transfer of at least $240,000.00 from the pension plan and annuity fund to service providers. The complaint further alleges that the trustees allowed the annuity fund to retain at least $5.9 million in undocumented secured loans to fund participants, including trustee and Local 829 president McNamee, Jr., and failed to prudently investigate or evaluate the annuity fund's investment of over $5 million into an illiquid real estate investment trust. On May 2, 2012, the court entered a partial consent order removing the defendants as trustees and appointing an independent fiduciary. New York Office

D.    Prudence

Solis v. Beacon Associates Management Corp. (S.D.N.Y.)

On November 30, 2012, the Court preliminarily approved the global settlement of this case and multiple state and federal suits, including a case brought by the New York Attorney General, against three investment companies and their principals in connection with imprudent investments with Bernard L. Madoff Investment Securities LLC made by more than 100 ERISA plans and other investors. The defendants are the investment companies Beacon Associates Management Corp. and Andover Associates Management Corp. and their principals, Joel Danziger and Harris Markhoff; investment advisor Ivy Asset Management LLC and its principals, Lawrence Simon and Howard Wohl; and the investment management and advisory company J.P. Jeanneret Associates, Inc. and its principals, John P. Jeanneret and Paul Perry. The settlement provides for the Ivy defendants to pay $210 million, the Jeanneret defendants to pay $3 million, and the Beacon defendants to pay $3.5 million and also give up claims to about $3.4 million. It is expected that more than $100 million will be recovered from the Madoff bankruptcy estate. The settlement documents include an agreement on a method for allocating the money among the investors and an agreement limiting the amount that the private attorneys will receive from the settlement fund. The defendants and the Madoff bankruptcy trustee also have resolved the trustee's lawsuit against the defendants. The private plaintiffs sent notices to the plaintiff class members, who had the opportunity to object to the settlement, or for some class members, to opt out. Those who want to participate in the settlement were required to file claims by January 30, 2013 and provide releases to the defendants. The judge scheduled a fairness hearing for March 15, 2013. The Secretary's complaint, filed on October 21, 2010, alleges, among other things, that the defendants recommended, made, and maintained investments with Madoff, losing hundreds of millions of dollars of their clients' assets while collecting huge fees for themselves. The amended complaint, filed on March 8, 2011, added allegations to address the contention that Ivy was not a fiduciary and allegations that the defendants' fraudulent material misrepresentations and failures to disclose material facts about Madoff constitute "fraud or concealment" under ERISA's statute of limitations, thereby enabling the Secretary to recover losses for breaches that occurred more than six years before the complaint was filed. See also In re Beacon Associates and In re Jeanneret Associates, Section K. Financial Institution and Service Provider Cases. Plan Benefits Security Division

Solis v. Clark Graphics (S.D. Ohio)

On September 30, 2011, the Secretary filed a complaint against Clark Graphics, Inc., Mary Clark, James Clark, Stephen Clark and Marcia Dowdell, fiduciaries of two plans sponsored by Clark Graphics. The complaint alleges that Dowdell, the plans' third party administrator, failed to account for approximately $500,000 of the plans' assets between May 2000 and August 2009 and failed to prudently administer the plans. The complaint also alleges that the remaining fiduciaries failed to monitor the actions of Dowdell. The complaint seeks restoration of the plans' assets, appointment of an independent fiduciary, and a permanent injunction as to all of the defendants. On July 16, 2012, the court entered a default judgment against Marcia Dowdell, holding her jointly liable to the plans for $505,551.46 and permanently enjoining her from serving as a fiduciary or service provider to any ERISA-covered plan. In addition, James Clark and Clark Graphics were permanently enjoined from violating ERISA. On the same date, the court entered a consent order and judgment with respect to Mary Clark and Stephen Clark, requiring Mary Clark to immediately restore $505,551.46 to the plans and permanently enjoining Mary Clark and Stephen Clark from serving as ERISA fiduciaries. Chicago Office

Solis v. Dynasty Construction, Inc. (D. Md.)

On January 25, 2012, the Secretary filed a complaint against Dynasty Construction, Inc. and John J. Barrett, III, alleging that they invested the assets of the company's 401(k) plan in an Employee Investment Savings Account ("EISA") investment offered by TransContinental Airlines. The TransContinental EISA was a Ponzi scheme operated by Louis Pearlman, who has been sentenced to 25 years in prison. Before the plan assets were transferred to the EISA, they were worth over $775,000. After the January 2012 transfer, they were valued at less than $30,000. The Secretary contends that Barrett and Dynasty did not act prudently and did not act in the sole interest of the plan participants, that they did not adequately research the EISA, and if they had adequately researched it, they would have determined that it was not a prudent investment for the plan. Philadelphia Office

Secretary v. Georgetown Realty, Inc. (D. Ore.)

On June 29, 2012, the Secretary filed a complaint against Georgetown Realty, Inc. and John Mahaffy, fiduciaries of the company's Profit Sharing Plan and Trust, alleging that they imprudently invested nearly all of the plan's assets in a failed real estate joint venture called RiverGate, causing the plan to lose substantially all of its assets (approximately $1.5 million). The complaint further alleges that the fiduciaries made prohibited payments to parties in interest, failed to collect on a participant loan, and failed to maintain the liquidity of plan assets sufficient to meet benefit obligations and timely pay distributions. Seattle Office

Solis v. Hutcheson (D. Idaho)

On May 15, 2012, the Secretary filed a complaint along with a motion for a temporary restraining order and a preliminary injunction, seeking removal of Matthew D. Hutcheson and the appointment of an independent fiduciary to take control of plan assets currently under the control of an entity called the Retirement Security Plan & Trust ("RSPT"). On May 16, 2012, the court entered the temporary restraining order. On June 13, 2012, the court issued a preliminary injunction, finding that the Secretary had demonstrated the type of immediate and irreparable injury necessitating entry of a preliminary injunction and granting the Secretary's request to continue the appointment of the independent fiduciary over RSPT and the removal of Hutcheson through the pendency of the litigation. The Department continues to investigate whether Hutcheson has control over any other (non-RSPT) ERISA-covered assets and whether further action is necessary to prevent his misuse of those assets as well. The Secretary's action is stayed pending conclusion of Hutcheson's criminal trial. Plan Benefits Security Division

Solis v. J.W. Buckholz Traffic Engineering, Inc. (M.D. Fla.)

On March 15, 2011, the Secretary filed a complaint against J.W. Buckholz Traffic Engineering, Inc., Jeffery William Buckholz and Burita Hillyard, fiduciaries of the company's Profit Sharing Plan. The complaint alleged misappropriation of plan assets, including imprudent loans made by the plan administrator. The complaint also alleged that the plan rented property owned by the plan for less than appropriate market rental rate. On December 7, 2011, the court entered a consent judgment requiring Buckholz to restore losses of $13,147.24 to the plan. On January 3, 2013, the court ordered default judgment against defendant Hillyard for the sum of $2,693.55, plus post-judgment interest, funded through an offset of her plan account balance. Atlanta Office

Solis v. Massam (S.D. Fla.)

On March 1, 2012, the Secretary filed a complaint against A. Robert Massam and his medical practice, A. Robert Massam, P.A., with respect to two related plans, the Defined Benefit Plan and the Money Purchase Plan. Massam pled guilty to misappropriating more than $1.2 million in plan funds, after he diverted the plans' assets by wire transfer to a European bank in Austria and then used the money to pay personal expenses and to pay the operating expenses for his practice. The Secretary's motion for default judgment was granted on March 6, 2013 in the amount of $149,694.87. Atlanta Office

Solis v. Parnell & Co., LLC (D.S.C.)

On December 29, 2010, the Secretary filed a complaint alleging that Christopher L. Parnell and Parnell & Company, LLC, the fiduciaries of the company's 401(k) Profit Sharing Plan & Trust, knowingly made imprudent investments in a real estate transaction using plan assets. Parnell received proceeds from the real estate transaction, but allegedly never restored to the plan the initial investment from the transaction or the proceeds, resulting in the loss of $49,875 and approximately $20,178 in lost earnings. The complaint also alleges that Parnell made withdrawals from the plan for his personal use and failed to distribute benefits to terminated employees. The Secretary seeks, among other things, restitution, a permanent injunction barring Parnell from serving as a fiduciary, and the appointment of a successor fiduciary or administrator at defendants' expense. On June 29, 2011, the defendants filed their answer and a counterclaim. Parnell admits he was a fiduciary and party in interest but alleges that he was physically and mentally unable to serve in such a capacity and that plan participants actually served as fiduciaries because of their awareness of Parnell's alleged illness. Atlanta Office

Solis v. Seibert (M.D. Fla. and 11th Cir.)

On August 24, 2009, the Secretary filed a complaint against Floyd Seibert, who was criminally convicted in 2006 for causing his company's pension plan, for which he served as trustee, to purchase worthless bonds in excess of $3.5 million from a shell company that Seibert controlled. Seibert has been ordered to pay the $3.5 million as part of his criminal restitution, but this did not include interest or other lost opportunity costs. Additionally, he is a plan participant with an account balance, which the criminal court did not order to be offset against his debt to the plan. The Secretary's complaint sought an order for Seibert to restore to the plan the approximately $1.5 million in lost opportunity costs and an order permitting Seibert's account balance to be offset against the amount he owes the plan. On February 4, 2011, the court granted summary judgment in the Secretary's favor, ordering the defendant to restore $1,253,661.64 in lost opportunity costs and further ordering that his plan account balance of about $600,000 be offset against this loss. The court rejected the defendant's argument that Federal Rules of Evidence 403, 404(b), and 410 prevented the court from considering the defendant's admissions in his criminal plea agreement on the embezzlement charges. (The substance of those admissions was corroborated by the affidavit of the Department's investigator.) The court also rejected the defendant's statute of limitations and collateral estoppel defenses. Seibert appealed this decision to the Eleventh Circuit of Appeals; the Eleventh Circuit's decision is pending. The Secretary's brief, filed on October 28, 2011, argues that the district court properly granted summary judgment based on the overwhelming record of fiduciary misconduct that had already resulted in a criminal conviction following Seibert's guilty pleas and also properly exercised its discretion in making discovery and evidentiary rulings prior to the summary judgment. The Secretary received a favorable decision affirming the district court's decision on March 21, 2012. Atlanta Office (district court) and Plan Benefits Security Division (court of appeals)

Solis v. Stuart (C.D. Cal.); Solis v. Schmitz (In re Schmitz) (Bankr. E.D. Cal.)

On January 25, 2012, the Secretary obtained a consent judgment in which Shannon Stuart agreed to a $35,000 offset to pay for costs of an independent fiduciary to terminate the SJ Burkhardt Employees' Profit Sharing Plan and distribute its assets. On August 26, 2011, the Secretary obtained a consent judgment and order against Steven John Schmitz, finding that his debt to the plan was non-dischargeable, requiring him to restore $86,421.14 to the plan, and permanently enjoining him from future service as a fiduciary or service provider to any ERISA-covered plan. The consent judgments settle charges in the Secretary's complaint, filed on October 20, 2010, that Stuart and Schmitz, as plan trustees, imprudently invested $200,000 of the plan's assets in exchange for a 2/3 interest in a real estate note that was never secured by a recorded deed of trust. The complaint alleged that they failed to prudently monitor the investment and collect the amounts due under the loan and imprudently approved a $125,000 loan from the plan without memorializing the loan in writing or obtaining security. The Secretary had filed an adversary complaint on October 12, 2010 in Schmitz's bankruptcy, seeking an order of non-dischargeability of debt. On February 11, 2011, the bankruptcy court granted the Secretary's motion to remove the bankruptcy reference and transferred the bankruptcy case to the district court. On April 28, 2011, the court granted the Secretary's motion for consolidation of the ERISA case and the bankruptcy proceeding, after which the Secretary filed a motion for summary judgment against Stuart that the court granted in part. See also Solis v. Stuart, Section B.1. Collection of Plan Contributions. Los Angeles Office

E.    Preemption

Access Mediquip v. United Health (5th Cir.) (en banc)

The Fifth Circuit granted en banc rehearing on April 26, 2012 concerning ERISA's preemption of the plaintiff healthcare provider's state law claims of negligent misrepresentation, quantum merit, violations of the Texas Insurance Code, promissory estoppel, and unjust enrichment. The plaintiff healthcare provider alleges that for many plan beneficiaries insured by the defendant insurance company, the insurance company had misrepresented to the plaintiff whether the beneficiary was covered. Relying on these misrepresentations, the plaintiff provided medical equipment to the beneficiary and suffered losses when the insurer later denied coverage. To recover these losses, the plaintiff sued the defendant using several state law causes of actions. The panel decision concluded that the state law claims of negligent misrepresentation, violations of Texas Insurance Code and promissory estoppel are not preempted because the basis for these causes of action are the alleged misrepresentations between the insurer and the healthcare provider. For the other claims of quantum merit and unjust enrichment, the panel found the claims to be preempted because the causes of action derive from the healthcare provider's standing in the shoes of the plan beneficiaries in disputing whether the plan terms would have covered the services for the beneficiaries. The petition, which the en banc court granted, argues that the panel's decision that ERISA does not preempt the misrepresentation, promissory estoppel and Texas insurance claims, conflicts with prior Fifth Circuit law. After obtaining Solicitor General approval, the Secretary filed an amicus brief in support of the reasoning adopted by the panel on July 11, 2012. The Secretary participated in oral argument on September 19, 2012. The court issued a favorable decision on October 5, 2012. Plan Benefits Security Division

ALPA v. United Airlines (California Court of Appeals)

This appeal is from an order of the state Superior Court in San Francisco holding that ERISA does not preempt application of a California "kin care" law under which employers who offer paid sick leave to their employees must allow them to take this leave to care for specified relatives. The Airline Pilots Association ("ALPA") brought suit against United for denying its pilots use of their sick leave for the kind of care specified by the California statute. United contended, among other things, that ERISA preempts application of the state law, but the court found, as ALPA argued, that the sick leave policy was a "payroll practice" under the Secretary's regulation and advisory opinions and not an ERISA plan. The Secretary filed an opening brief on October 3, 2011 and a reply brief on November 2, 2011. The briefs argue that the sick leave policy is not an ERISA-covered plan under applicable advisory opinions, and that the California law is not preempted as applied to the United sick leave plan because it is not an ERISA-covered plan (i.e., it is an excluded payroll practice), and because, even if it is covered by ERISA, ERISA does not preempt state laws that do not require or assume the establishment of an ERISA plan and can be met through a non-ERISA plan. The "kin care" law, which explicitly excluded ERISA plans, is not preempted for this reason (even though the ERISA exclusion is not effective under Mackey v. Lanier Collection Agency & Service, Inc.). The court has not yet issued its decision. Plan Benefits Security Division

Fossen v. BC/BS of Montana (9th Cir.)

This was an appeal from a district court decision holding that ERISA preempts a Montana health insurance rate regulation that prohibits insurers in the state from requiring individuals to pay a premium greater than the premiums of similarly-situated individuals based on the health status of the individual. Although the court held that the Montana law was an insurance regulation that ERISA saves from preemption in 514, it held that because the law was duplicative of a HIPPA provision, ERISA 702, it is preempted because it duplicates an ERISA civil enforcement remedy. The court did not discuss ERISA 731, which provides that the part of ERISA setting forth the HIPPA provisions "shall not be construed to supersede any provision of State law which established, implements, or continues in effect any standard or requirement solely relating to health insurance issuers in connection with group health insurance coverage except to the extent such standard or requirement prevents application of a requirement of this part." Nor did the court address the regulation at 29 C.F.R. 2590.731(a) or the preamble to that regulation, which reiterates the Conference Report statement that "[s]tate laws with regard to health insurance issuers that are broader than federal requirements in certain areas, would not 'prevent the application of'" that part of ERISA. The plaintiff's brief was due on February 9, 2011. The Secretary filed a brief on March 18, 2011, and participated in the oral argument on August 4, 2011. On October 18, 2011, the court issued an adverse decision, holding that ERISA preempts the little HIPAA provision but saves the state unfair insurance practice claim. Although the plaintiffs did not petition for rehearing, Blue Cross petitioned for panel rehearing with regard to the unfair insurance practices law. Rehearing was denied on December 23, 2011. After Blue Cross filed a cert. petition, the Supreme Court invited the government's views on whether ERISA preempts the state unfair insurance practice law. On December 26, 2012, the government filed its brief opposing certiorari and arguing that the ERISA does not preempt the state law. The Court denied cert. on January 22, 2013. Plan Benefits Security Division

Sherfel v. Gassman (S.D. Ohio)

Wisconsin officials who administer and enforce the Wisconsin Family and Medical Leave Act (WFLMA) were sued by Nationwide Insurance, which seeks declaratory and injunctive relief preventing Wisconsin, on ERISA preemption grounds, from enforcing the WFLMA in a way that requires Nationwide to permit its employees to substitute paid short-term disability benefits for unpaid maternity leave, as an ALJ has held is required in a case that Nationwide settled. The case involves the same WFLMA substitution provision that was briefed in the Wisconsin Supreme Court in Aurora Med. Group v. Dept. of Workforce Dev. (2000), which held that ERISA does not preempt the state law's application to paid sick leave because it is saved under the proviso (ERISA 514(d)) saving other federal law from being "impaired" by ERISA insofar as the federal FMLA encourages states to adopt more protective leave provisions. On December 7, 2010, the Secretary filed an amicus brief that makes a similar "impairment" argument under the federal saving clause and also argues that the WFLMA does not impermissibly augment ERISA remedies supplemental to the civil enforcement provisions of ERISA 502(a)(2). The district court issued an adverse decision on September 28, 2012, finding that ERISA preempts Wisconsin from enforcing the WFLMA and rejecting the savings clause argument. The case has been appealed, but the Department decided not to participate. Plan Benefits Security Division

F.    Participants' Rights and Remedies

Barboza v. California Assoc. of Firefighters (9th Cir.)

This is an appeal from a dismissal of a case involving the management of a MEWA that provides benefits for California firefighters. On February 7, 2012, the Secretary filed an amicus brief arguing, on the one hand, that the district court properly found that the trustees of a welfare plan funded exclusively by employee contributions breached their fiduciary duties by failing to undertake an annual actuarial review of the plan's funding reserves but, on the other hand, that the court erred in excusing them from their statutory duty to hold the plan's assets in trust based on their alleged reliance on the oral statements of an unidentified employee at the Department of Labor. The Secretary also argued that the court erred in failing to consider whether to appoint an independent fiduciary to hold the plan's assets in trust and perform other necessary administrative functions. Plan Benefits Security Division

CIGNA Corp. v. Amara (S. Ct. and D. Conn.)

On March 8, 2010, the Supreme Court asked for the government's views on whether to grant certiorari in this case, which involves a conversion from a defined benefit to a "cash balance" plan. The issue raised by the CIGNA plan defendants is whether a showing of "likely harm" is sufficient to entitle participants and beneficiaries to recover benefits based on an alleged inconsistency between the explanation of benefits in the summary plan description (SPD) and the terms of the plan itself. On May 26, 2010, the Solicitor General filed a brief opposing cert. The Court granted cert. on June 28, 2010 on the CIGNA petition, and the Solicitor General filed a brief on behalf of the Secretary on October 22, 2010. The brief argues that participants who show likely harm from a failure to abide by an SPD are entitled to the benefits promised in the SPD unless the plan defendants establish that not adhering to the SPD was harmless; that a detrimental reliance requirement would be inconsistent with ERISA's text, origins, and purposes; and that participants may sue under ERISA 502(a)(1)(b) to recover benefits based on an SPD, and are not limited to suits for "appropriate equitable relief" under 502(a)(3). The Solicitor General participated in oral argument on November 30, 2010. On May 16, 2011, the Court remanded the case. The Supreme Court held that there is no remedy under ERISA 502(a)(1)(B), but then held that there is a remedy under 502(a)(3) and that "equitable" relief includes a "surcharge" loss remedy. On September 22, 2011, the Secretary filed an amicus brief in the district court on remand arguing that, under the Supreme Court's decision in the case, the court could award the same remedy as a matter of reformation or surcharge. The Secretary participated in the oral argument on December 9, 2011. On December 20, 2012, the district court issued a wholly favorable decision granting the same remedy as a matter of reformation or surcharge. The court stayed the remedies pending appeal. The plaintiffs have appealed on one issue, and CIGNA, which has posted a bond, also appealed. Plan Benefits Security Division

David v. Alphin (4th Cir.)

The plaintiffs appealed the dismissal of their class action suit, arguing that the fiduciaries of their 401(k) plan breached their fiduciary duties of prudence and loyalty and engaged in prohibited transactions by allowing the plan to continue to invest in Bank of America stock and in bank-affiliated mutual funds. The court dismissed the case in its entirety based on its conclusion that the plaintiffs lacked Article III standing to bring the defined benefit claims, and that the defined contribution claims were untimely because the initial decision to invest in the challenged investments was made more than six years before suit was filed. The Secretary's amicus brief, filed on December 28, 2011, argues that constitutional standing exists based on (1) the increased risk of loss even if the plan is "overfunded," (2) the harm caused to the plan by the alleged fiduciary breach, and (3) the invasion of a statutory right caused by the alleged breach. The Secretary also argues that fiduciaries are under a continuing duty to ensure the prudence of the plan's investment and to refrain from engaging in prohibited transactions and that the statute runs from each instance in which the fiduciaries fail to live up to these duties. The Secretary presented oral argument on September 18, 2012. The court issued a wholly adverse decision on January 14, 2013. The plaintiffs filed a petition, which the Secretary supported, for en banc and panel rehearing on February 28, 2013. The court denied the petition on March 12, 2013. Plan Benefits Security Division

Fish v. Greatbanc Trust Co. (7th Cir.)

In this private ERISA action, plaintiffs appealed from a summary judgment that dismissed their entire lawsuit as time-barred because they filed suit more than three years after "the earliest date that the plaintiff had actual knowledge of the breach or violation." 29 U.S.C. 1113(2). The district court found that, more than three years before filing, plaintiffs received documents that disclosed facts sufficient to state plaintiffs' pleaded claims. On January 29, 2013, the Secretary filed an amicus brief in support of plaintiffs, arguing that the court erred in ascribing actual knowledge to the plaintiff-participants and current trustee. Plan Benefits Security Division

Fisher v. JP Morgan (2d Cir.)

This is an appeal to the Second Circuit of an employer stock case that was dismissed on Moench grounds. On June 8, 2010, the Department sent a letter to the court alerting it to Secretary's briefs in Gearren and Citigroup and attaching those briefs. Oral argument was held on January 25, 2011, but the Secretary did not participate. The panel asked the parties for additional letter briefing on the effect of the Citigroup decision, which the parties simultaneously filed on January 3, 2012. On May 8, 2012, the court issued an adverse decision, upholding the dismissal, based on the Citigroup decision. The plaintiffs filed a petition for cert. on September 5, 2012, which the Supreme Court denied on November 13, 2012. Plan Benefits Security Division

Frommert v. Conkright (2d Cir.)

After remand from the Supreme Court and the Second Circuit, the district court deferred to the plan administrator's interpretation of the plan language as permitting an offset of the kind the defendants advocated and also held that there was no disclosure violation despite the fact that the plan Summary Plan Description (SPD) indicated that there would be a straight offset of the lump sum benefits. The plaintiffs' opening brief was filed on April 20, 2012, and Secretary filed an amicus brief on May 11, 2012, arguing that the court erred on these holdings. The Secretary participated in oral argument on November 15, 2012. Plan Benefits Security Division

Gearlds v. Entergy Services (5th Cir.)

This is an appeal from a district court decision dismissing a fiduciary breach action for failure to state a claim. The plaintiff claims that he was promised continued health benefits when he took early retirement from his company and in fact received those benefits for several years and waived benefits under his wife's plan when she retired in reliance on his having health benefits himself. He sued Entergy and Hartford for equitable relief under section 502(a)(3) to remedy these claimed fiduciary breaches in misleading him as to his eligibility for these benefits and also sued for equitable estoppel. Without determining whether he plausibly pled a claim for fiduciary breach, the district court dismissed this claim on the basis that the relief sought was precluded as make-whole monetary relief under the Fifth Circuit's decision in Amschwand. The court also cited the Supreme Court's recent decision in CIGNA v. Amara. The court dismissed his claim for equitable estoppel because the plaintiff did not allege anything akin to bad faith, and dismissed the claim against Entergy because it was not the claims administrator. The plaintiff filed his brief on July 28, 2012, and the Secretary filed an amicus brief on September 4, 2012. Without hearing oral argument, the Fifth Circuit issued a favorable decision on February 19, 2013, concluding that Amara essentially overruled the Amschwand decision and that a surcharge remedy was potentially available. Plan Benefits Security Division

Halo v. Yale Health Plan (2d Cir.)

A pro se plaintiff appealed from the March 8, 2012 decision of a district court in Connecticut affirming a denial of benefits for eye surgery that the plaintiff, a PhD student at Yale, had performed out-of-network for what she alleges was an emergency. The appeal raises, among other things, the proper standard of review of an administrator's denial where the denial was untimely and otherwise violates the claims regulation, an issue which the Secretary has addressed previously. On January 28, 2013, the Secretary filed an amicus brief supporting Halo and arguing that the case should be considered by the district court de novo given the numerous violations of the claims regulation. Plan Benefits Security Division

Kenseth v. Dean Health Plan (W.D. Wis. and 7th Cir.)

On April 15, 2010, the Secretary filed an amicus brief in this case on remand from a decision of the Seventh Circuit concerning what remedies are appropriate under ERISA 502(a)(3). The case involves a participant who was told by the customer representative for her health plan that she would be covered for gastric bypass surgery, but was forced to pay out of pocket when the plan determined, post-surgery, that the surgery was not covered by her plan. The Secretary's brief argued that Supreme Court and Seventh Circuit precedents, consistent with traditional equity principles, provide for make-whole monetary relief and disgorgement of ill-gotten gains in 502(a)(3) actions against breaching fiduciaries. On February 14, 2011, the district court issued an adverse decision. The court decided that the remedies sought by the participant "make whole" relief reimbursing the medical expenses or restitution of ill-gotten gains stemming from the denial are not "appropriate equitable relief" under 502(a)(3) of ERISA. The court held that reimbursing the participant for the medical expenses would be a form of compensatory relief barred by the Supreme Court's Mertens v. Hewitt Associates decision, thus rejecting the Secretary's reading of that decision as permitting a "surcharge" against a fiduciary for a fiduciary breach as was awarded by equity courts in the days of the divided bench. Even if it were "equitable," the court held that the remedy would not be "appropriate" because the participant could have brought an action for benefits under 502(a)(1)(B) instead, even though such action could probably not succeed under a deferential standard of review and given the terms of the plan; it was also not "appropriate" because there was no evidence the participant would have acted differently (i.e., not undergone the surgery) even if she had not been told the surgery was a covered procedure. The court also held that a restitution remedy was not available because, among other things, there was no evidence that Dean is holding money or property belonging to the participant. Addressing issues not briefed by the Secretary, the court also held that the participant lacked standing to seek other injunctive relief because she is no longer a participant in the plan (i.e., Dean no longer insures her employer's plan); and the court denied attorney's fees, holding that the participant did not achieve even "partial success" (despite securing a remand to district court) and rejecting a catalyst theory for recovery (despite changes the plan made to its policies and practices allegedly in response to this lawsuit). The plaintiff appealed the decision to the Seventh Circuit. The Secretary filed an amicus brief on June 13, 2011, arguing that the plaintiff is entitled to make-whole relief under the intervening Cigna v. Amara Supreme Court decision. By invitation of the court, the Secretary participated in oral argument on December 8, 2011. The court has not yet issued its decision. Plan Benefits Security Division

McCravy v. MetLife (4th Cir.)

On April 28, 2010, the Secretary filed an amicus brief in support of the plaintiff, a participant in an employer-sponsored life insurance plan who claimed that she would have been entitled to life insurance proceeds after her daughter was murdered if not for breaches of fiduciary duty by MetLife in accepting premiums for many years, misinforming her about coverage, and failing to inform her about her rights to convert to an individual policy after her daughter reached the age of 19. The Secretary's brief argues that the make-whole monetary relief that the plaintiff seeks is available as equitable relief under ERISA. The court heard argument, in which the Secretary participated, on January 27, 2011. On May 16, 2011, the same date that the Supreme Court issued its decision in CIGNA, the Fourth Circuit issued an adverse decision, holding that the relief sought does not qualify as equitable relief under ERISA 502(a)(3). The plaintiff immediately petitioned for panel and en banc rehearing based on the CIGNA decision's recognition of an equitable surcharge remedy. The panel granted rehearing and ordered more briefing and a second argument. On September 28, 2011, the Secretary filed a supplemental brief discussing the effect of CIGNA. The Secretary presented oral argument on May 15, 2012 and received a favorable decision on July 5, 2012. Plan Benefits Security Division

Pacific Shores Hospital v. United Behavioral Health (9th Cir.)

This is an appeal of a district court decision upholding a denial of benefits by a third party administrator under an arbitrary and capricious standard despite numerous errors in the denial. The plaintiff's brief was filed on July 23, 2012, and the Secretary filed a brief on August 13, 2012, supporting the plaintiff and arguing that arbitrary and capricious review entails a serious look at a denial and requires reversal when, as here, the final decision maker disregards or misapprehends the relevant facts and fails to apply the standards set out in the plan. Plan Benefits Security Division

Santomenno v. John Hancock Life Ins. Co. (3d Cir.)

This is an appeal from a dismissal of a private ERISA claim brought by plan participants challenging certain investment fees. The district court held that the participants were required to make a demand on the trustees before they could file suit. The Secretary filed a brief in support of the plaintiffs on September 30, 2011, arguing that the district court's holding on the demand issue is entirely without merit. The Secretary participated in oral argument on February 10, 2011 and received a favorable decision on April 16, 2012. A petition for cert. was denied on October 30, 2012. Plan Benefits Security Division

Schultz v. Prudential (7th Cir.)

The plaintiff in this benefit denial case appealed and also sought initial en banc consideration of the district court's decision dismissing the benefit claim against Prudential on the grounds that, under Seventh Circuit law, a plan participant may sue only the plan itself or in some instances the plan administrator but not the insurer in an ERISA suit for benefits. This is the issue that the Secretary successfully briefed and won in Cyr in the Ninth Circuit. The Secretary filed a brief on November 18, 2011 in support of the en banc petition on the same basis. The en banc court denied the petition, but a panel of the Seventh Circuit heard argument in the case on January 17, 2012. The court issued a decision on March 3, 2012, finding against the plaintiff on the merits and expressly noting but declining to address the Cyr issue. Plan Benefits Security Division

Taylor v. Key Corp (6th Cir.)

This is a Moench presumption case that survived a motion to dismiss (see Taylor v. Key Corp., Section A. Employer Stock), but was later dismissed on constitutional standing grounds, with the court concluding that there was no constitutional injury based on a netting of profits and losses from the stock purchases. (The Moench presumption is that an ESOP fiduciary is entitled to a presumption that it acted consistently with ERISA by investing in employer stock.) Because the named plaintiff had earned more from the company stock as a result of the artificial inflation than she lost, the court found no actual "injury-in-fact." The plaintiff appealed on the constitutional standing issue and the defendants cross-appealed on the Moench and misrepresentation issues. The plaintiff filed its opening brief on the standing issue on January 5, 2011, and the Secretary filed an amicus brief on that issue on January 12, 2011, arguing that the plaintiff incurred an "injury in fact" sufficient to support her constitutional standing to bring the claim based on allegations that the she purchased some employer stock and sold it at a loss, regardless of whether she separately profited from other, earlier stock sales; and that, even if it were proper, at this threshold stage, to net plaintiff's gains on some transactions against losses on others, the invasion of her statutory right to faithful fiduciary conduct would be enough to establish constitutional standing, and more fundamentally, the relevant loss for "injury-in-fact" analysis is the loss to the plan in this kind of representative action, not the loss to the individual plaintiff. KeyCorp's brief on the cross-appeal addressing the Moench and disclosure issues was filed on April 13, 2011; the plaintiffs' response was filed May 13, 2011, and the Secretary filed a brief on the cross-appeal issues on May 20, 2011. The Secretary participated in oral argument on April 20, 2012. On May 25, 2012, the court ruled that Taylor lacked Article III standing because she had gained more than she lost from the alleged violation and thus did not reach the merits issues. Plan Benefits Security Division

Tibble v. Edison (9th Cir.)

This is an appeal from a summary judgment and trial on the merits in an excessive fee case in which the plaintiffs lost. The Secretary filed an amicus brief on May 25, 2011 arguing that: (1) the district court's factual findings supported its conclusion that the fiduciaries did not act with the requisite level of care in choosing mutual funds that were available with lower, institutional level fees; (2) the court erred in finding most of the plaintiffs' claims barred by the statute of limitations because, contrary to the court's conclusion, the fiduciaries operated under a continuing obligation to manage the plan's assets prudently; (3) the court correctly held that ERISA 404(c) did not immunize the fiduciaries from liability with regard to the selection of plan investments; and (4) ERISA 406(b)(3) prohibits fiduciaries from making investment decisions that result in the company they serve as directors and officers receiving an economic benefit from a third party, and the court erred in holding to the contrary. The last cross-reply brief was filed on December 8, 2011. The Secretary participated in oral argument on November 6, 2012. Plan Benefits Security Division

U.S. Airways v. McCutchen (S. Ct.)

On June 25, 2012, the Supreme Court granted cert. in this subrogation/reimbursement case presenting the issue whether ERISA permits courts to use equitable principles such as the make-whole doctrine in fashioning equitable relief under section 502(a)(3). The government filed a brief "in support of neither party" on September 5, 2012, arguing that section 502(a) does not generally allow courts to recognize equitable defenses or principles overriding or limiting plan terms, for instance, by subjecting a plan subrogation or reimbursement provision to pro rata apportionment, but also arguing that the well-established common fund principle allowing an offset for a proportionate share of attorney's fees incurred in recovering monies from a third-party tortfeasor is the type of "appropriate equitable relief" that does apply in these circumstances. The Solicitor General participated in the oral argument which took place on November 27, 2012. Plan Benefits Security Division

G.    Section 510

George v. Junior Achievement of Central Indiana (7th Cir.)

This case involves a claim by an ERISA plan participant that he was fired from his job in retaliation for unsolicited complaints that he made to his supervisors about funding problems with regard to his 401(k) plan. The district court held that ERISA does not protect informal, unsolicited internal complaints, an issue which has divided the circuits. The Secretary has filed briefs twice previously addressing this issue and advocating for the protection of unsolicited complaints. The plaintiff filed his brief on December 9, 2011, and the Secretary filed an amicus brief on December 16, 2011 arguing that the internal complaint here constituted an "inquiry" within the meaning of ERISA 510 and is protected from retaliation. The Secretary participated in oral argument on April 4, 2012. On September 4, 2012, the Seventh Circuit issued a favorable decision, agreeing that ERISA protects against retaliation based on these kinds of complaints. Plan Benefits Security Division

H.    Defensive Litigation

None

I.    Participant Loans

Solis v. Fensler (N.D. Ill.)

On August 30, 2011, the Secretary filed a complaint against David Fensler and Anthony Monaco, trustees for the United Employee Benefit Fund, alleging that the trustees engaged in prohibited transactions by issuing distributions of the plan's assets under the guise of "loans." Since the plan's inception, approximately 200 "loans" have been issued, but almost none have received a single payment and none have been paid back. On July 3, 2012, the court entered a consent order and judgment requiring the defendants to take corrective action on approximately $1.7 million in outstanding participant loans and to prospectively alter their treatment of future loans. Chicago Regional Office

Solis vs. Milton Pate and Associates, Inc. (N.D. Ga.)

On April 29, 2011, the Secretary filed a complaint against Milton Pate and Associates, Inc, and fiduciaries, Milton Pate, Sr. and Milton Pate Jr., alleging that the individual defendants have taken participant loans that are in default and violate the terms of the company's 401(k) Retirement Plan. As of September 2008, Milton Pate, Sr. had an outstanding balance of $94,778.91 and Milton Pate, Jr. had an outstanding balance of $38,938.54 on their participant loans. The complaint also alleges that employee contributions were not forwarded to the plan on a timely basis from January 2007 until August 15, 2008. The complaint seeks restitution, as well as an order requiring that any of the defendants' claims to plan assets be offset against the losses. The suit further seeks a permanent injunction barring the defendants from serving in a fiduciary capacity to any ERISA-covered plan and the appointment of an independent fiduciary at the defendants' expense. On September 22, 2011, the clerk entered an order of default against all defendants. On November 7, 2011, the judge granted the Secretary's motion for default judgment, ordering all relief sought. On May 31, 2012, the court issued an amended judgment and order, requiring the plan to offset the individual plan accounts of Milton Pate, Sr. and Milton Pate, Jr. against the amount of losses including lost opportunity costs, and finding that the total amount of losses, including lost opportunity costs, is $135,517.97, plus post-judgment interest calculated from November 7, 2011 to the present. Atlanta Office

J.    MEWAs

Solis v. Doyle (D.N.J. and 3d Cir.)

On April 28, 2005, the Secretary filed a complaint against the trustees of the Professional Industrial & Trade Workers Union (PITWU) Health and Welfare Fund, the marketer of the plan's health benefits, and the owners of two professional employer organizations for diverting plan assets. In order to obtain the fund's health benefits for their employees, employers were required to join a professional employer organization and employees were required to join an alleged union. They were required to pay union dues, fees to the professional employer organization, and administrative fees to the marketer. The professional organizations retained large sums that were nominally the employer's health premiums. In total, about $4,582,264 in plan assets was diverted. The fund collapsed with more than $7 million of unpaid health claims. Following a bench trial in 2009, one defendant entered into a consent order in which he agreed to be enjoined from serving as a fiduciary or service provider for any ERISA-covered plan and to restore more than $195,000 to the plan. On June 30, 2010, the district court issued an adverse decision granting judgment in favor of the remaining defendants, a former trustee and a party that marketed the plan, on the basis that the Secretary failed to conclusively establish that the plan was underfunded or that the marketing fees charged were unreasonable. The Secretary filed an appeal on August 27, 2010, with an opening brief filed on December 13, 2010 and a reply on March 4, 2011. The Secretary's briefs contend that the district court erred in holding that the trustee did not breach her duties when the evidence showed that she failed to prudently manage the trust fund and did nothing to prevent the diversion of its assets, and that there was substantial evidence, which the district court failed to address, that the other defendant was a fiduciary in that he controlled plan assets and that the fees he forwarded from plan assets were unreasonable. The Third Circuit heard oral argument on April 27, 2011. The Secretary received a favorable decision on March 27, 2011, vacating the decision and remanding for further proceedings. New York Office (district court) and Plan Benefits Security Division (court of appeals)

Solis v. Marks (E.D.N.Y.); In re Nieves (Bankr. D. Md.)

In 2001, the Secretary filed a complaint against Walter Nieves and others, including Mari Elena Marks and Timothy Marks, regarding the "U.S. Alliance" MEWA, alleging improper transfers of over $900,000, mismanagement of the plans, and abandonment of the plans and their participants. The Secretary litigated an emergent relief action and in 2003 obtained consent judgments. Nieves subsequently filed for bankruptcy. After protracted litigation that reached the Fourth Circuit and involved transfers of real estate owned by Nieves, the bankruptcy trustee successfully secured $234,848.23 for the plans. On December 28, 2011, the court granted the Secretary's motion for the deposit of the funds into a court registry account. On April 24, 2012, the court granted the Secretary's request to appoint a new independent fiduciary and receiver of the plans, as the previous independent fiduciary is deceased. New York Office

K.    Financial Institution and Service Provider Cases

Solis v. Amtren, Inc. (M.D. Ala.); Solis v. Otorhinolaryngology Associates, P.C. (M.D. Ala.)

On June 14, 2011 and September 30, 2011, the Secretary filed complaints against Amtren and Charles Lamberth and against Otorhinolaryngology and Dr. Rick Love, fiduciaries of the Amtren Corporation Profit Sharing Plan and the Otorhinolaryngology Associates, P.C., Profit Sharing Plan, respectively. In 2006, Lamberth allegedly directed his Merrill Lynch financial advisor, Gilbert Meadows, to liquidate approximately 98% of the Amtren plan's assets, and transfer these assets totaling $139,000.00, as a "loan" back to the employer. Between 2007 and 2008, Love allegedly directed Meadows to liquidate and transfer over 92% of the Otorhinolaryngology plan's assets as a "loan" to that employer. In both instances, no repayments were made and no loan documents were ever executed. The Secretary's position was that Merrill Lynch and Meadows knowingly participated in their co-fiduciaries' violations and/or failed to take reasonable efforts to remedy them. On October 21, 2011, the Department finalized a settlement with Merrill Lynch and Meadows, in which Merrill Lynch voluntarily restored all losses to both plans. Merrill Lynch agreed to institute extensive, enterprise-wide modifications to its current training regimen for its investment advisors whose conduct might implicate ERISA and also modified its handbook to more thoroughly describe and provide guidance regarding ERISA prohibited transactions. Merrill Lynch also agreed that Meadows will be subject to heightened supervision (in which approval would be required before any trades involving plans managed by him) for two years. Meadows agreed to complete extensive training regarding ERISA prior to acting as a financial advisor to any ERISA-covered plan. On October 25, 2011, the court entered a final judgment against Otorhinolaryngology and Dr. Love, removing them as fiduciaries, barring them from acting as fiduciaries of any ERISA-covered plan, requiring that any of Love's claims to plan assets be offset against the losses, and appointing an independent fiduciary at defendants' expense. On December 5, 2011, the court entered a final judgment against Amtren and Lamberth, providing for similar relief. On April 4, 2012, Merrill Lynch provided confirmation of satisfaction of all terms of the settlement. Meadows is no longer employed by Merrill Lynch. On May 7, 2012, Wells Fargo, Meadows' new employer, provided the Department with a copy of the heightened supervision plan it has imposed on Meadows, as had been required of Merrill Lynch under the original plan. Atlanta Office

In re Beacon Associates (S.D.N.Y.)

The defendants in this private ERISA litigation involving investments with Madoff funds contested class certification on the ground that the Secretary's parallel litigation (Solis v. Beacon Associates Management Corp.) makes class treatment unnecessary under the "superiority" prong of Rule 23(b)(3); the Secretary's suit, in their view, already "represents" and seeks a full recovery for the named and absent class members (plans who lost money as a result of investments that their investment managers, Beacon and Jeanneret, placed with Madoff). In opposition to class certification, the Ivy Defendants also argued that they were not ERISA fiduciaries because their client was Beacon, not the plans who invested through Beacon. On January 9, 2012, the Secretary filed an amicus brief arguing that the Secretary's parallel suit should not be considered as a reason to deny class certification and that the Ivy Defendants' argument should be rejected under the "law of the case" doctrine (because the court previously rejected the argument in ruling on Ivy's motion to dismiss), as a merits question that is not properly addressed as part of a class certification determination, and because it lacks merit under ERISA's "investment advisor as fiduciary" definition and under the plan assets regulation and regulatory five-party investment advisor test. On March 15, 2012, the court issued a favorable decision, agreeing with the Secretary on all points and granting class certification. See also Solis v. Beacon Associates Management Corp., Section D. Prudence and In re Jeanneret Associates, Section K. Financial Institution and Service Provider Cases. Plan Benefits Security Division

Bio-Med Plus 401(k) Plan; First NLC 401(k) Plan; and Pharmed Group 401(k) Plan (unfiled)

During 2012, the Secretary negotiated an out-of-court settlement, dated August 17, 2012, arising from the Department's investigations into the actions of independent fiduciaries appointed to wind up the affairs of the Bio-Med Plus 401(k) Plan, First NLC 401(k) Plan, and Pharmed Group 401(k) Plan. In each case, against the explicit advice of EBSA, the trustees attempted to qualify the plans for the Department's Abandoned Plans program to gain preferential tax treatment, despite their ineligibility for the program. The trustees charged their fees, as well as the fees of attorneys and banks involved in the attempt to pass the plans through the Abandoned Plan program, directly to the account balances of participants. Each plan was charged with tens of thousands of dollars in fees, and the Department's investigation revealed that many of these fees were excessive and unnecessary due to the plans' non-eligibility for the program. However, the bankruptcy courts had sanctioned the fees, and the potential defendants were adamant that their actions had been prudent under any subjective standard. The trustees eventually agreed to restore $18,000 in assessed fees to the plans, and 100% of these funds were directly distributed to participants, with the trustees bearing the cost of locating and compensating each participant. The trustees also committed to attending twelve hours of fiduciary training. Atlanta Office

In re Jeanneret Associates (S.D.N.Y.)

This case is closely related to the In re Beacon Associates litigation, raised the same issue as to class certification and involves some of the same parties. On March 15, 2012, the court issued a favorable decision agreeing with the Secretary on all points and granting class certification. See also Solis v. Beacon Associates Management Corp., Section D. Prudence and In re Beacon Associates, Section K. Financial Institution and Service Provider Cases. Plan Benefits Security Division

Leimkuehler v. American United Life Ins. Co. (7th Cir.)

This case involves a putative class action brought by plans that invested in mutual funds selected from a menu of options offered by American United Life Insurance ("AUL"). The issues on appeal are whether an entity (AUL) that retains discretionary authority in the selection of mutual fund share classes offered to a plan, while engaging in revenue sharing with those same mutual funds, has fiduciary obligations with respect to mutual fund share class offerings; and whether ERISA 3(21)(A)(i), which makes a person a fiduciary to a plan "to the extent he exercises any authority or control respecting management or disposition of its assets," requires the person to have discretionary authority or control over those plan assets. The district court held that even if the defendant retained discretionary authority in the selection of mutual fund share classes, and engaged in revenue sharing with respect to such mutual funds, AUL did not incur fiduciary liability concerning share class selection and revenue sharing to the extent it followed plan instructions and did not actively use its discretion to make the selections itself. In addition, the district court held that an individual can never be a functional fiduciary under ERISA 3(21)(A)(i) unless he exercises discretionary control or authority over plan assets and plan management. The plaintiffs filed their opening brief on May 25, 2012, and the Secretary filed a brief on June 1, 2012. The Secretary's brief argued that AUL's retention of discretionary authority in the selection of mutual fund share classes implicates fiduciary obligations and should have prevented it from setting its own compensation in its revenue sharing arrangements. The brief also argued that, under the plain language of the statute, fiduciary status is conferred on persons who exercise "any authority or control" over plan assets, so that discretion is not an element that needs to be pleaded to survive dismissal. The Secretary participated in oral argument on November 28, 2012. Plan Benefits Security Division

Solis v. Results One (N.D. Ill.)

On March 8, 2011, the Secretary filed a complaint against Results One Financial, LLC, a firm that provided investment management services to employee benefit plans, and Steven Salutric, an owner and director of the company, seeking restoration of approximately $1.2 million in losses to the accounts of five ERISA plans. The complaint alleges that between March 2005 and September 2009, Results One and Salutric impermissibly used plan assets for the benefit of six entities related to Salutric. In January 2010, the U.S. Securities and Exchange Commission sued Results One for violations of the Investment Advisors Act. As a result of that litigation, control of Results One was placed in the hands of a court-appointed receiver. In December 2011, the Department of Justice indicted Salutric for embezzling plan assets. On June 5, 2012, the court entered a default judgment against defendant Salutric requiring him to restore $1.2 million in losses to the plan. On September 17, 2012, the court entered a consent judgment requiring the remaining defendant, Results One, to restore $850,000 in losses to the plan. Chicago Office

Tri-3 v. Aetna (3d Cir.)

This appeal stems from a putative class action brought by plaintiff Tri3 Enterprises, a medical provider and assignee for participants in ERISA health benefit plans, against Aetna, Inc., an insurer of those ERISA plans, for retroactive denials of coverage for two medical devices that Aetna considers to have been fraudulently or improperly billed and for which Aetna has demanded restitution of the alleged overpayments. The suit alleges that Aetna failed to follow the ERISA claims procedure and thus failed to provide a "full and fair" review of the coverage denial. The district court dismissed the case for failure to state an ERISA claim. The issue on appeal is whether Aetna's demand for restitution from a medical device supplier of previously-paid benefits that Aetna has determined were not covered by the plan is subject to review under ERISA and its accompanying claims regulation. On November 30, 2012, the Secretary filed a brief in support of the appellant medical provider. Plan Benefits Security Division

Solis v. Zenith Capital (N.D. Cal.)

On October 23, 2008, the Secretary filed suit against Zenith Capital LLC, a registered investment advisor, and Rick Tasker, Martel Cooper and Michael Smith, owners of and investment advisers with Zenith. The complaint alleges that defendants served as fiduciaries to 14 ERISA-covered plans, providing discretionary investment advice and asset management services for a fee, that the ERISA plans relied on defendants to make all investment decisions, and that defendants were the sole investment advisors for each plan. Defendants allegedly recommended that the plans invest in Global Money Management, L.P. (GMM), a hedge fund, and the plans all invested in GMM, relying on defendants' advice. When GMM failed in 2004, all but four of the plans lost their total investments. The complaint also alleges that LF Global Investments, LLC, the investment manager and General Partner of GMM, paid Zenith half of all incentive fees LF Global received from GMM that derived from funds invested with GMM on behalf of Zenith clients, including the plans, which were not told of the LF Global arrangement prior to their investing in GMM. The parties expect to settle this case. Plan Benefits Security Division

L.    Orphan Plans

Solis v. Atchison (S.D. Ohio)

On May 15, 2012, the Secretary filed a complaint against Mark Atchison and the Zuber Landscape, Inc. Davis-Bacon Turnkey Pension Plan alleging that Atchison failed to distribute $18,523.49 to seven participants, engaged in a prohibited transfer of $22,301.93 of plan assets held by 18 participants, abandoned the plan, and failed to terminate the plan. Cleveland Office

Solis v. Berman (D.S.C.)

On May 25, 2011, the Secretary filed a complaint against Robert Berman, seeking appointment of an independent fiduciary to administer the Employee Resource Management Inc. 401(k) Plan, which had been abandoned. Berman agreed to a consent judgment and order, entered on August 21, 2012, requiring him to properly terminate the plan and distribute plan assets to participants, as well as attend eight hours of fiduciary education. Atlanta Office

Solis v. B.I.T. Computers, Inc. 401(K) Profit Sharing Plan, f/k/a BIT Consulting Group, Inc. 401(K) (E.D.N.Y.)

On November 3, 2011, the Secretary filed a complaint seeking the appointment of an independent fiduciary for the B.I.T. Computers, Inc. 401(K) Profit Sharing Plan, which was orphaned in 2008 when the plan sponsor company went out of business. The Secretary's complaint sought the distribution of $179, 376.96 in plan assets. The court appointed an independent fiduciary on June 15, 2012. New York Office

Solis v. Blodgett (E.D. Mich.)

On August 26, 2011, the Secretary filed a complaint against Robert Blodgett, a fiduciary of the Blodgett Construction & Home Improvement Co. 401(k) Plan, which was orphaned when the company ceased operations in September 2005. On April 13, 2012, the court entered a consent order and judgment removing Blodgett as the fiduciary of the plan, permanently enjoining him from serving as a fiduciary or service provider to any ERISA-covered plan, and appointing an independent fiduciary to terminate the plan and distribute the plan's assets. Chicago Office

Solis v. Button Holdings, LLC (D. Vt.)

On January 30, 2012, the Secretary filed a complaint alleging that fiduciaries failed to properly manage plan assets and administer the plan. Pursuant to a consent judgment and order, entered on July 17, 2012, an independent fiduciary was appointed by the court to administer the plan and distribute approximately $14,683 in assets to the four remaining participants. Boston Office

Solis v. Cape Allied Transit, Inc. (D. Mass.)

On August 20, 2012, the Secretary filed a complaint and consent judgment involving the Cape Allied Transit 401(k) Plan which been abandoned since 2008. Pursuant to a consent judgment and order, entered on August 23, 2012, Cape Allied Transit agreed to have an independent fiduciary appointed by the court to administer the plan and distribute approximately $20,065.44 in assets to the nine remaining participants. Boston Office

Solis v. Capeway Yarns, Inc. (D. Mass.)

On November 29, 2012, the Secretary filed a complaint and consent judgment involving the Capeway Yarns, Inc. 401(k) Plan, which had been abandoned since 2007. Pursuant to a consent judgment and order entered on December 4, 2012, Capeway Yarns agreed to have an independent fiduciary appointed to administer the plan and distribute approximately $17,626.00 in assets to the six remaining participants. Boston Office

Solis v. Cardio Fitness Center 401(k) Plan (S.D.N.Y)

On November 14, 2011, the Secretary filed a complaint against Cardio Fitness Center 401(k) Plan and one of its trustees, Gina Alleva aka Gina Gromelski, to have an independent fiduciary appointed so that approximately $96,000 in assets may be distributed to 24 participants. This plan was abandoned when its two trustees and signatories stopped performing their duties and the plan sponsor ceased operations. The court appointed an independent fiduciary on April 4, 2012. New York Office

Solis v. C.K. Design and Construction 401(k) Plan (D. Mont.)

On January 12, 2012, the Secretary filed a complaint against the plan to obtain the appointment of an independent fiduciary to wind down the abandoned plan following the death of the only named trustee, Craig Kinnaman. As of 2007, the plan had 13 participants and approximately $15,000 in plan assets. On September 14, 2012, the court entered a consent decree appointing an independent fiduciary. Chicago Office

Solis v. Crown Auto, Inc. (C.D. Cal)

On July 27, 2012, the Secretary filed a complaint against Crown Auto, Inc., seeking the appointment of an independent fiduciary to wind down the company's abandoned 401(k) plan. The company went out of business in 2007, and the only remaining trustee, Wayne Crownover, died in 2009. As of May 19, 2010, the 401(k) plan had 16 participants and $21,391.53 in plan assets. Los Angeles Office

Solis v. Custom Patio Rooms, Inc. (W.D. Pa.)

On January 15, 2013, the Secretary filed a complaint against Custom Patio Rooms, Inc., alleging that it failed to appoint a fiduciary to manage and oversee its 401(k) retirement and profit sharing plans after it ceased operations in 2009. The complaint seeks the removal of the company as the plans' administrator and an order appointing an independent fiduciary to administer the plans and distribute its assets to participants. As of August 2012, the Profit Sharing 401(k) Plan had 24 participants and about $289,000 in plan assets, and the Union Employee 401(k) Plan had eight participants and approximately $12,000 in plan assets. Philadelphia Office

Solis v. Douglass Brothers, Inc. (D.R.I.)

On August 20, 2012, the Secretary filed a complaint and consent judgment involving The Douglass Brothers, Inc. 401(k) Retirement Plan, which had been abandoned since 2008. Pursuant to a consent judgment and order, entered on August 20, 2012, Douglass Brothers agreed to have an independent fiduciary appointed by the court to administer the plan and distribute $178,324.83 in assets to the 14 remaining participants. Boston Office

Solis v. Explore, Inc. (D. Md.)

On October 11, 2012, the Secretary filed a complaint against Explore, Inc., alleging that the company failed to appoint a fiduciary to manage and oversee the company's 401(k) retirement plan after it ceased operations in 2001. The complaint seeks the removal of the company as the plan administrator and an order appointing an independent fiduciary to administer the plan and make distributions to plan participants. As of April 2011, the plan had three participants and over $4,000.00 in plan assets. On January 25, 2013, the Secretary filed a motion for entry of default against Explore. Philadelphia Office

Solis v. Franklin Printers Supply Company, Inc. Retirement Savings Plan (D.N.J.)

On March 7, 2012, the Secretary filed a complaint against the Franklin Printers Supply Company, Inc. Retirement Savings Plan, which was left without a trustee after the death of Richard Heller. As of May 25, 2011, the plan had assets of $46,016.26. The plan did not answer or appear, and the Secretary moved for a default judgment seeking the appointment of an independent fiduciary to distribute the plan assets and wind up the plan. The court granted the Secretary's motion on December 6, 2012. New York Office

Solis v. Globalfon, Inc. (E.D. Va.)

On October 4, 2011, the Secretary filed a complaint against Globalfon, Inc., alleging that Globalfon failed to appoint a fiduciary to manage and oversee the company's 401(k) retirement plan after the company ceased operations in 2009. As of June 2010, the plan had 13 participants and over $350,000 in plan assets. On December 19, 2011, the Secretary filed a motion for default judgment, and the court held a hearing on that motion on January 6, 2012. On March 24, 2012, the court entered a default judgment, appointing an independent fiduciary to make distributions to participants and terminate the plan. Philadelphia Office

Solis v. Gupta (N.D. Ill.)

On October 10, 2012, the Secretary filed a complaint against Gautam Gupta alleging that he failed to administer and terminate the Gautam Gupta MD d/b/a Nutrition Clinic 401(k) Plan. The Secretary filed a motion for default judgment on January 23, 2013. Chicago Office

Secretary v. Hi-Country Electric, Inc. (E.D. Cal.)

On June 27, 2012, the court entered a consent judgment against Hi-Country Electric, Inc., and Rob Fritzemeier, the company's president and trustee of its 401(k) Plan. The Secretary's complaint, filed on March 29, 2012, alleged that they failed to provide for the prudent and complete termination of the plan after the company ceased operations in February 2010. Under the judgment, Fritzemeier remains a fiduciary to terminate the plan, after which he is permanently enjoined from serving as a fiduciary or service provider to any ERISA-covered plan and from violating ERISA in the future. Los Angeles Office

Solis v. Invenio Technologies Corporation (D. Mass.)

On January 18, 2013, the Secretary filed a complaint alleging that Invenio Technologies Corporation failed to properly manage plan assets and administer its 401(k) Savings Plan. The complaint seeks to have an independent fiduciary appointed to administer the plan and distribute approximately $116,579.94 in assets to the 12 remaining participants. Boston Office

Solis v. J.M. Singley & Associates, Inc. (E.D. Pa.)

On October 23, 2012, the Secretary filed a complaint against J.M. Singley & Associates, Inc. alleging that the company failed to manage and oversee the company's 401(k) retirement plan after the company ceased operations in 2010. The complaint seeks removal of the company as plan administrator and an order appointing an independent fiduciary to administer the plan and make distributions to participants. As of May 2012, the plan had eight participants and over $17,000.00 in plan assets. On January 20, 2013, the Secretary filed a motion seeking permission to serve the corporation by publication. See also Solis v. Singley and Associates, Inc., Section B.1. Collection of Plan Contributions and Section M. Contempt and Subpoena Enforcement. Philadelphia Office

Solis v. J.P. Maguire Company, Inc. Salary Savings Plan (E.D.N.Y.)

On November 30, 2011, the Secretary filed a motion for default judgment and appointment of an independent fiduciary to assume control of the J.P. Maguire Company, Inc. Salary Savings Plan. Due to criminal convictions, the plan's only named fiduciary has been barred under ERISA 411 from administering or operating the plan. The Secretary's complaint, filed on June 15, 2011, sought the distribution of $60,833.25 in plan assets. The court appointed an independent fiduciary on September 14, 2012. New York Office

Solis v. Kreager (D. Minn.)

On October 25, 2012, the Secretary filed a complaint against Valerie Kreager for failing to administer and terminate the Nationwide Wash Systems, Inc. 401(k) Plan. As of December 31, 2011, the plan had ten participants and $29,146 in assets. Chicago Office

Solis v. LFAC, Inc. Profit Sharing 401(k) Plan (N.D. Ohio)

On June 8, 2012, the Secretary filed a complaint against the LFAC, Inc. Profit Sharing 401(k) Plan, alleging that the plan had been abandoned. On October 3, 2012, the Secretary secured a judgment appointing an independent fiduciary to administer and terminate the plan. Cleveland Office

Solis v. Local 911 Annuity Defined Contribution Fund (D.N.J.)

On October 24, 2011, the Secretary filed a complaint against the Local 911 Annuity Defined Contribution Fund, which was orphaned in 2007 when the only named fiduciary was barred from administering any union or benefit fund pursuant to a criminal plea agreement. The Secretary's complaint seeks the distribution of $369,061.16 in plan assets. The court appointed an independent fiduciary on July 25, 2012. New York Office

Solis v. Maximus Multimedia International, LLC (C.D. Ill.)

On June 27, 2012, the Secretary filed a complaint against Maximus Multimedia International, LLC and the company's 401(k) Savings Plan, for failing to terminate the plan or distribute the plan's assets when the company ceased doing business in 2010. The plan had 160 participants with total assets of $893,510.38 as of January 28, 2013. The complaint seeks the appointment of an independent fiduciary to terminate the plan and distribute its assets. Chicago Office

Solis v. Mekos (N.D. Ind.)

On April 2, 2012, the Secretary filed a complaint against Patricia Berridge Mekos and Kelly Fox Burris, fiduciaries of the ASI d/b/a ASO North America 401(k) Plan, for their failure to terminate the plan and distribute its assets totaling $3,554.42 to the six remaining plan participants. On August 24, 2012, the court approved a consent order and judgment appointing an independent fiduciary to terminate the plan and distribute its assets. Chicago Office

Solis v. Merritt (S.D. Ohio)

On July 27, 2012, the Secretary filed a complaint against Gary L. Merritt and Bemcore, Inc., fiduciaries of the Bemcore, Inc. Employee Incentive Plan, alleging that they failed to administer and terminate the plan. Merritt was ineligible to act as a fiduciary after he pled guilty to embezzlement and theft from an employee benefit plan, but he failed to appoint a new fiduciary. He had been ordered to pay restitution in the amount of $182,070.56. On January 22, 2013, the Secretary secured a judgment appointing an independent fiduciary to administer and terminate the plan. Cleveland Office

Solis v. Morris (N.D. Ill)

On August 23, 2011, the Secretary filed a complaint against Paul Morris and the Notability Solutions, LLC 401(k) Plan, alleging that Morris, the plan fiduciary, failed to terminate the plan or distribute its assets when the company ceased doing business in 2002. As of September 30, 2009, the plan had seven participants with vested account balances valued at $95,000. On February 26, 2012, the court entered a default judgment against Paul Morris, removing him as a fiduciary of the plan and appointing an independent fiduciary to terminate the plan and distribute its assets. Chicago Office

Solis v. Multicultural and Literacy Institute (E.D. Pa.)

On January 11, 2013, the Secretary filed a complaint against Multicultural and Literacy Institute, alleging that it failed to appoint a fiduciary to manage and oversee its 401(k) retirement plan after it ceased operations in August 2010. The complaint seeks the removal of the Institute as the plan administrator and an order appointing an independent fiduciary to administer the plan and make distributions to plan participants. At the time the complaint was filed, the plan had six participants and over $5,000 in plan assets. Philadelphia Office

Solis v. Progressive Machine Company, Inc. 401(k) Plan (D.N.J.)

On November 29, 2012, the Secretary filed a complaint seeking the appointment of an independent fiduciary to distribute $81,463.00 in plan assets of the Progressive Machine Company, Inc. 401(k) Plan. Due to a criminal conviction in 2010, the plan's last known fiduciary has been barred from administering or operating the plan. New York Office

Solis v. Roberts (W.D. Pa.)

On July 28, 2011, the Secretary filed a complaint against John Louis Roberts, Mara Scanlon Roberts and Sterling Printing and Graphics, Inc. alleging that from January 2004 to July 2006, the defendants failed to forward and/or failed to timely forward employee contributions to the company's 401(k) Plan, and after the company ceased operations in 2006, failed to operate and administer the plan and its assets or appoint anyone to do so.. As of June 14, 2011, there were 12 participants in the plan and over $82,000 in assets. On February 17, 2012, the court entered a consent judgment that directed the installation of an independent fiduciary, permanently barred the defendants from serving as fiduciaries or service providers to ERISA-covered plans, and ordered the defendants to restore $2,000 in assets to the plan. Philadelphia Office

Solis v. Rusty's Truck Service Inc. Profit Sharing Plan (N.D.N.Y.)

On March 7, 2012, the Secretary filed a complaint against Rusty's Truck Service Inc. Profit Sharing Plan, seeking the appointment of an independent fiduciary after the death of William D. "Rusty" Carlton, the plan trustee. As of March 15, 2011, the plan had approximately four remaining participants and $13,825.79 in total assets. On August 3, 2012, the court granted the Secretary's request for a default judgment and appointed an independent fiduciary to administer the plan and distribute its assets. New York Office

Sky Management 401(k) Plan (aka Ameri-Fi 401(k) Plan) (D.R.I.)

On February 2, 2012, the Secretary filed a complaint alleging that the fiduciary failed to properly manage plan assets and administer the Ameri-Fi 401(k) Plan. Pursuant to a consent judgment and order, entered on April 9, 2012, an independent fiduciary will be appointed by the court to administer the plan and distribute approximately $24,836.49 in assets to the three remaining participants. Boston Office

Solis v. Sonora Environmental, L.L.C. (D. Ariz.)

On October 24, 2012, after defendants' failed to respond to the court's order to show cause, the court entered a default judgment against Sonora Environmental, L.L.C. and Lee Jolley, ordering them to restore $3,276.32 to the company's 401(k) Plan and to pay the costs of the court-appointed independent fiduciary to terminate the plan and distribute its assets. The Secretary's complaint, filed on November 15, 2010, alleged that that Jolley, the plan trustee, failed to remit employee contributions and loan repayments of at least $3,075.07 from January 2005 through at least October 2008 and that Jolley and the company effectively abandoned the plan when they ceased administering it. On October 19, 2011 the Secretary filed an application for clerk's entry of default against the company for failure to retain corporate counsel as ordered by the court, and default was entered by the clerk on December 15, 2011. Los Angeles Office

Solis v. Stephen Bosniak, MD, PC, Profit Sharing Plan (E.D.N.Y.)

On April 5, 2012, the Secretary filed a complaint against Stephen Bosniak, MD, PC, Profit Sharing Plan, alleging that the plan had been abandoned after Bosniak, its trustee, died in February 2007. The plan has $62,776.74 in assets. On October 25, 2012, the Secretary filed a motion for default judgment and the appointment of an independent fiduciary to wind down the affairs of the plan and distribute its assets. New York Office

Solis v. Surplus Assets, Inc. (D. Md.)

On September 14, 2012, the Secretary filed a complaint against Surplus Assets, Inc., alleging that the company failed to appoint a fiduciary to manage and oversee the company's 401(k) retirement plan after it ceased operations in or about 2009. As of December 2011, the plan had 5 participants and over $150,000.00 in plan assets. On December 12, 2012, the court entered a default judgment appointing an independent fiduciary to make distributions to plan participants and terminate the plan. Philadelphia Office

Solis v. Vanguard (S.D. Fla.)

On March 12, 2012, the Secretary filed a complaint against the fiduciaries of the Vanguard Corporation of America 401(k) Plan. In 2008, the plan sponsor ceased operations and abandoned the plan, which had approximately 26 participants and assets of $244,099.27. The Secretary seeks the appointment of an independent fiduciary to distribute plan assets and injunctive relief against the fiduciaries. Atlanta Office

Solis v. Wahlco Fabricators, Inc. (N.D. Okla.); Solis v. Wahl (Bankr. N.D. Okla.)

On August 17, 2011, the Secretary filed an action against Wahlco Fabricators, Inc. and its owner Cynthia Wahl, for failing to forward employee contributions totaling $6,183.41 and making delinquent contributions totaling $31,806.31 to the company's SIMPLE IRA Plan. The complaint alleges that the fiduciaries failed to properly administer the plan and used plan assets to benefit themselves. Wahlco Fabricators ceased operations in 2009. The company and Ms. Wahl have failed to respond to repeated requests for information and compliance. On May 29, 2012, the Secretary filed an adversary complaint in Ms. Wahl's Chapter 7 bankruptcy to ensure that her debt to the plan would not be discharged. On January 4, 2013, the bankruptcy court entered an agreed order of non-dischargeability of debt. On January 28, 2013, the district court entered a default judgment against Walhco Fabribcators. Dallas Office

Solis v. Windswept Environmental 401(k) Plan c/o Windswept Environmental Group, Inc. d/b/a Trade-Winds Environmental Restoration Inc. (E.D.N.Y.)

On December 17, 2012 the Secretary filed a complaint against the Windswept Environmental 401(k) Plan, seeking the appointment of an independent fiduciary to distribute $119,944.10 in assets to 12 participants. The plan was abandoned when its sole trustee passed away in 2008. New York Office

Solis v. Winer Industries 401(k) Profit Sharing Plan (D.N.J.)

On February 10, 2012, the Secretary filed a complaint against the Winer Industries 401(k) Profit Sharing Plan, seeking the appointment of an independent fiduciary to distribute $85,604.76 in assets. As a result of the retirement and death of the plan trustees, the plan was left without an active named fiduciary. On October 11, 2012, the court granted the Secretary's motion for a default judgment and appointed an independent fiduciary to administer the plan and distribute its assets. New York Office

Solis v. Zohouri Group (N.D. Ga.)

On September 5, 2012, the Secretary filed a complaint against Zohouri Group, LLC, Farbod Zohouri, and Lynn Schaeffer, alleging the abandonment of an employee benefit plan and its participants. The company was dissolved in 2008. The Secretary seeks an order restoring all plan losses, permanently enjoining defendants from serving as fiduciaries, and appointing an independent fiduciary to terminate the plan and distribute its assets. The plan currently has approximately 22 participants and assets of approximately $47,390.67. Atlanta Office

M.    Contempt and Subpoena Enforcement

Harris v. Ginsbach (D.S.D.)

On December 17, 2012, the Secretary, working through the Office of United States Attorney of South Dakota, filed a petition to enforce administrative subpoena against the custodian of records, a named partner of a law firm that sponsors an employee benefit plan. Before the scheduled hearing and before the Department had to incur travel expenses, the custodian produced responsive documents. Denver Office

Solis v. Grabowski (W.D. Pa.)

On April 6, 2012, the Secretary filed a petition to enforce an administrative subpoena against Ralph E. Grabowski and RG Benefit Services, Inc. The respondents failed to fully respond to a subpoena issued on May 16, 2011. A show cause hearing was scheduled for June 21, 2012. After the petition was filed but before the hearing, the respondents produced responsive documents. The Secretary withdrew the petition on June 13 2012. Philadelphia Office

Solis v. Jackson Home Medical Equipment, Inc. (E.D. Mich.)

On March 27, 2012, the Secretary filed a subpoena enforcement action against the fiduciary of the Aumack Co. 401(k) Plan. Cleveland Office

Solis v. Johnson (D.N.J.)

On November 16, 2012, the Secretary filed a motion asking the court to find Russell Johnson and Shellene Baker, the trustees of the Johnson Specialized Transportation 401(k) Plan, in contempt of a consent judgment entered in 2007. The fiduciaries violated their responsibilities under the consent judgment by not making required restitution payments to the 401(k) Plan and failing to pay required third party administrator and independent fiduciary fees. The defendant fiduciaries have now made the required payments of restitution and fees. New York Office

Solis v. Kephart (W.D. Pa.)

On June 6, 2012, the Secretary filed a petition to enforce administrative subpoenas against Timothy L. Kephart and Kephart Trucking Company, Inc. They failed to fully respond to subpoenas issued on November 17, 2011. A show cause hearing was scheduled for July 26, 2012. After the petition was filed but before the hearing, the respondents produced responsive documents. The Secretary withdrew the petition on July 10, 2012. Philadelphia Office

Solis v. Moore (C.D. Cal.)

On June 27, 2012, the court issued an order finding that Hezekiah Moore, M.D. and Hezekiah N. Moore M.D., P.C. shall each be fined $1,000 per day if they fail to purge themselves of contempt by July 9, 2012. The order also required that Moore and the company pay the Secretary's costs. The court issued the order in response to the Secretary's second motion for contempt and request for the assessment of fines against Dr. Moore filed on May 11, 2012. The Secretary's original motion for contempt, filed on February 10, 2011, was based on the defendants' failure to comply with any of the terms in a 2009 judgment. On March 28, 2011, the Secretary appeared at a hearing and on March 31, 2011, the court issued a minute order, recognizing its authority to enforce the judgment it issued through contempt proceedings and noting that the judgment was restitutionary against the defendants for breaches of fiduciary duty under ERISA. The court gave the defendants 60 days to purge themselves of the contempt order. This case arose from the Secretary's complaint, filed on July 18, 2008, concerning the company's Profit Sharing Plan, its Money Purchase Pension Plan, and its Profit Sharing Plan and Money Purchase Pension Plan. The complaint alleged that Moore failed to prudently invest about $150,000 in plan assets on or around October 2000 to November 2001 and failed to distribute the assets to two participants when they terminated their service. The Secretary also filed an amended complaint, alleging that Moore transferred $40,000 in plan assets to the company in September 2007. On August 6, 2009, the court granted the Secretary's motion for summary judgment on all counts, ordered restitution, and appointed an independent fiduciary. Los Angeles Regional Office

Solis v. Oral & Maxillofacial Surgery Associates of Greater New Haven, PC (D. Conn.)

On June 1, 2010, the Secretary filed a subpoena enforcement action against Oral & Maxillofacial Surgery Associates of Greater New Haven, PC and Leonard Skope. A show cause hearing was held on July 12, 2010. The respondents did not appear. On July 14, 2010, the court issued an order for compliance, imposing a penalty of $1,000 per day until compliance is achieved. A contempt hearing was scheduled for July 11, 2011. Again, the respondents failed to appear and a capius was issued. Per an arrangement with the United States Marshall, the respondents finally appeared on August 10, 2011. Respondents have complied with the subpoena. On December 12, 2011, the Department filed a show cause order regarding the respondents' previously ordered $1,000 a day penalty. At a March 26, 2012 sanctions hearing, the court ordered the defendant to pay $18,000.Boston Office

Solis v. Sigurdsson (D. Md.)

On July 13, 2012, the Secretary filed a petition to enforce an administrative subpoena against Ivar Sigurdsson and Sigurdsson & Company, Inc. The defendants failed to respond to a subpoena issued on June 30, 2011 and did not attend the November 29, 2012 show cause hearing.. At the conclusion of the hearing, the court granted the Secretary's petition and ordered the defendants to produce the requested documents to the Secretary within seven days. Philadelphia Office

Solis v. Singley and Associates, Inc. (E.D. Pa.)

On August 15, 2011, the Secretary filed a complaint against J. Brant Singley, J.M. Singley & Associates Inc., and Bradley Weiss for failing to remit in excess of $20,000.00 in employee contributions to the company's 401(k) Plan and for remitting certain contributions late and without interest. Singley and Weiss were plan trustees and the company is the plan sponsor and administrator.. On March 20, 2012, the court entered a consent order and judgment requiring that Singley restore over $23,000 in unremitted contributions and lost opportunity costs to the plan and a default judgment and order finding Weiss liable for over $26,000 in plan losses, as well as the cost of an independent fiduciary. Pursuant to the court's order, an independent fiduciary was appointed and Weiss was removed as trustee and permanently barred from serving in a fiduciary capacity to any ERISA-covered plan. On August 8, 2012, the Secretary filed a motion for contempt against Singley for his failure to pay restitution to the plan. In October 2012, Singley died. On November 19, 2012, the Secretary filed a Statement Noting a Party's Death, informing the court of Singley's death. See also Solis v. Singley and Associates, Inc., Section B.1. Collection of Plan Contributions and Solis v. J.M. Singley and Associates, Inc., Section L. Orphan Plans. Philadelphia Office

Solis v. UnitedHealth Group, Inc. (D. Minn.)

On January 15, 2013, the Secretary filed a subpoena enforcement action asking the court to order United Healthcare Group (UHG) to comply with an administrative subpoena. The Department is investigating UHG, a nationwide company that provides health care insurance and services to health care plans to approximately a quarter of the population in the United States, to determine whether UHG is complying with its fiduciary responsibilities and the claims adjudication regulations, including processing claims in a timely manner. The primary focus of the subpoena is the production of the raw data regarding claims in electronic format. UHG has objected to the scope of the Department's subpoena request. Chicago Office

Solis v. UnitedHealth Group, Inc. (D. Minn.)

On November 27, 2012, the Secretary filed a subpoena enforcement action asking the court to order United Healthcare Group (UHG) to comply with an administrative subpoena. The Secretary is asking the court to enforce the subpoena with respect to five specific items relating to processing claims and appeals of ERISA-covered plans performed by UHG or employer groups sponsoring an Administrative Services Only (ASO) Plan. For example, audits are among the items requested. UHG had advised the Secretary that internal audits exist but has refused to provide them. Cleveland Office

Solis v. Weir (W.D. Pa.)

On December 21, 2011, the Secretary filed a motion for contempt against Kevin T. Weir and Liberty-Pittsburgh Systems, Inc. for failure to comply with a consent judgment, entered in August 2011, requiring the defendants to make full restitution of $67,137.67 to the company's 401(k) plan through a series of six payments. The court issued a show cause order to the defendants and a hearing was scheduled for January 23, 2012. The consent judgment settled charges in the Secretary's complaint, filed on February 3, 2011, alleging that the defendants failed to deposit certain employee contributions and employee loan repayments into the plan during the period January 2007 to December 2009. The consent order also permanently enjoined Weir and the company from acting as fiduciaries and provided for the plan to be terminated. At the January 23, 2012 show cause hearing, the company claimed that it could not comply with the terms of the consent judgment because it did not have sufficient funds. The court required the company to provide the Secretary with documentation demonstrating its financial condition, which it did. The Secretary also obtained financial information regarding Weir who also claimed he was unable to repay the plan, despite his having entered into the consent agreement in August 2011. Weir and the Secretary agreed to enter into a modified consent judgment which required Weir to repay to the plan not less than $1,000 per month and report to the Secretary his income during the payout period. On June 21, 2012, the court entered the modified consent judgment and on June 22, 2012 the Secretary withdrew the contempt motion. The Secretary also filed judgment liens on property in the name of the company and Weir. An independent fiduciary is serving as plan administrator for the purposes of terminating the plan and distributing the recovered assets. See also Solis v. Weir, Section B.1. Collection of Plan Contributions. Philadelphia Office

N.    Miscellaneous

In re American Airlines (Bankr. S.D.N.Y.)

In its Chapter 11 bankruptcy proceeding, American sought to extend the Bankruptcy Code's "automatic stay" or otherwise enjoin eleven individuals from obtaining judicial review of benefit denials (mostly for disability benefits) by various benefit plans sponsored by American. The Secretary opposed its request because of its failure at that juncture to satisfy the high threshold for staying actions against non-debtors (the benefits plans) brought by participants exercising their rights under ERISA to obtain judicial of benefit denials. The Secretary filed an amicus brief in opposition to American's request for injunctive relief on June 27, 2012 and participated in the hearing on June 28. Prior to the hearing, five defendants had stipulated to the relief sought by the debtors; the claims of all but one of them were payable directly from the assets of American. American agreed to dismiss three other defendants from the adversary proceeding without obtaining any relief, as the claims of each of them would be paid by disability plans entirely self-funded by the employees. American also agreed to dismiss a fourth defendant on the condition that American itself would have no liability, if the defendant were successful on its benefit claim. By the June 28 hearing, the status of only two of eleven defendants remained unresolved. The court agreed that there was no need for a preliminary injunction enjoining one of them, as his action was already stayed as a result of the automatic stay. The court was unwilling to stay the last of the eleven actions, agreeing with the Secretary that the possible increase in American's contribution to its ERISA plan if the defendant were successful was an insufficient basis for staying the action. The order reflecting the court's ruling was entered on July 18, 2012. Although the June 18 order did not put an absolute end to the adversary proceeding, no further papers have been filed. Plan Benefits Security Division

Arendt v. Solis (9th Cir.)

On January 11, 2012, the Secretary filed a motion to dismiss and an answer to a complaint, which seeks a judgment that the Pension Protection Act of 2006 (PPA) is unconstitutional to the extent that it permits underfunded multiemployer plans in critical status to eliminate certain early retirement benefits. The plaintiffs, who had not yet qualified for retirement, filed a response on January 31, 2012, arguing against the Secretary's motion to dismiss on the bases that the PPA violates equal protection and due process. On February 14, 2012, the Secretary filed a reply arguing that the suit is meritless. On March 19, 2012, the district court granted the Secretary's motion, holding that plaintiffs failed to show either a statutory basis for the suit or a state action predicate for the constitutional challenges. On appeal, the appellants filed their opening brief on July 5, 2012, and the Secretary filed a response brief on August 16, 2012. Oral argument is scheduled for May 6, 2013. Plan Benefits Security Division

In re Blue Raven Technology, Inc. (Bankr. D. Mass.)

On May 30, 2012, the debtor filed for Chapter 11 bankruptcy, which was subsequently converted to a Chapter 7 proceeding on August 4, 2012. On October 18, 2012, the Chapter 7 trustee filed an application with the bankruptcy court seeking, among other things, to terminate the debtor's retirement plan, to appoint a plan administrator, and to receive a waiver of the requirement to file an auditor's opinion for the plan's 2012 Form 5500. In lieu of filing a formal objection, the Secretary filed motions for extensions of time to object to the trustee's application in order for the Secretary to negotiate with the trustee for a revised order. As a result of the negotiations, the Chapter 7 trustee agreed to withdraw his request for a waiver of the auditor's opinion requirement and agreed that the trustee, as plan administrator, remains fully responsible to monitor and/or remove an appointed agent. The trustee also agreed to include language in the order that made it clear that any expenditure of plan assets for plan administration and termination are subject to the standards and enforcement provisions set forth under ERISA and the plan documents. In addition, nothing in the parties' stipulated order limited the right of any party to bring an action under ERISA in relation to the administration and termination of the plan. The parties' revised order to the trustee's amended application was approved by the court on January 7, 2013. Boston Office

Cozen O'Connor v. Tobits (E.D. Pa.)

This interpleader action involves competing claims for pension plan benefits by, on the one hand, Jennifer Tobits, the same-sex spouse of Sarah Farley, and, on the other hand, Sarah Farley's parents. Before her death in 2010, Farley was a lawyer at Cozen O'Connor P.C and a participant in the firm's pension plan. She and Tobits were married in Canada on February 17, 2006 and thereafter resided in Illinois, where Farley worked for Cozen. Tobits claims benefits under a plan provision that says that a participant's spouse is entitled to survivor benefits where there is no designation of beneficiary on file. The plan does not define "spouse" except to say that to be entitled to benefits as a spouse, the marriage must have been at least one year in length (as this one was). The parents (and Cozen) claim, among other things, that section 3 of the Defense of Marriage Act (DOMA) precludes the plan from defining marriage for these purposes to include a same-sex spouse. Tobits claims that section 3 is inapplicable because it only precludes federal laws from defining spouse in that way and that even if section 3 applies, it is unconstitutional. The court asked for briefing on the constitutionality of DOMA. Tobits' attorney approached the Secretary about whether the government would also address the preliminary question concerning the applicability of section 3. The Justice Department filed a brief on December 30, 2011, which the Secretary reviewed, noting briefly that the plan may define spouse for purposes other than the QJSA and QPSA, such as under a default beneficiary provision, to include same-sex spouses, and stating that the government was not addressing whether the plan at issue here did so. The Justice Department presented argument on March 12, 2012. The court has not yet issued a decision. Plan Benefits Security Division

Solis v. Dietrich & Associates and Kurt E. Dietrich (E.D. Pa.)

On August 27, 2012, the Secretary filed a complaint against Dietrich & Associates, an annuity consultant and insurance brokerage firm, and Kurt E. Dietrich, its chief executive and sole shareholder, in connection Dietrich & Associates' receipt of a $522,047 payment from an insurance carrier in connection with the purchase of a group annuity for a pension plan sponsored and administrated by Memorial Hospital - West Volusia, Inc. The payment far exceeded the $50,000 that Memorial Hospital had agreed would be paid for Dietrich & Associates' services and violated a contractual provision specifically barring Dietrich & Associates from receiving compensation from any insurer for the pension plan's annuity. Unbeknownst to the plan, its trustees, or Memorial Hospital, Dietrich & Associates had separately entered into a contract with the Hartford Life Insurance Company, which provided for payment of compensation to Dietrich & Associates based on a percentage of the annuity's purchase price. When the defendants presented final bids for the annuity purchase to the plan and Memorial Hospital, they falsified the final bids of Hartford's competitors so that the Hartford bid was the lowest. By deceiving the plan and its fiduciaries, and by receiving and retaining impermissible compensation from the insurer, the defendants were unjustly enriched. The defendants filed a motion to dismiss, arguing that injunctive relief was not an appropriate remedy and that the complaint was barred by the statute of limitations, although the parties had a written agreement to toll the statute of limitations. On November 26, 2012, the court denied the defendants' motion to dismiss. Plan Benefits Security Division

In the Matter of Mid-States Express, Inc. (Bankr. N.D. Ill.)

On February 2, 2010, the Chapter 7 bankruptcy trustee filed a motion for a comfort order authorizing him to liquidate the assets of the company's 401(k) Plan, disburse the corpus of the plan to participants, and pay any administrative expenses associated with the liquidation and disbursement. On March 10, 2010, the Secretary filed an objection to this order. On July 2, 1010, the court held that it did not have subject matter jurisdiction to issue such an order under the Bankruptcy Code and denied the bankruptcy trustee's motion. On or about September 1, 2012, the bankruptcy trustee received about $25,000 from the fidelity bond carrier relating to unremitted contributions. Chicago Office

McLemore v. Regions Bank (1 Point Solutions) (6th Cir.)

The issues in this case were (1) whether a bankruptcy trustee with control over a bankruptcy estate that holds comingled plan assets (which had been mismanaged and misappropriated by the debtor) is an ERISA fiduciary with standing to bring a fiduciary breach action under ERISA against an alleged co-fiduciary (the bank in which the assets had been deposited and then looted by the debtor); and (2) whether the bankruptcy law doctrine of in pari delicto (unclean hands) applies to such an ERISA proceeding to potentially bar the bankruptcy trustee from asserting claims that the wrongdoing debtor arguably could not. In 2008, the Secretary successfully argued to the district court that the bankruptcy trustee was an ERISA fiduciary with standing to bring a fiduciary breach claim and that the in pari delicto doctrine did not apply. After protracted litigation in which the bankruptcy trustee (McLemore) lost on the merits of his ERISA and state law claims, the case was appealed, and the defendant Bank challenged the rulings on the issues in the Secretary's brief. The Secretary filed an amicus brief on November 19, 2010, arguing in support of the appellant (as the Secretary had before) that the bankruptcy trustee, who also is an ERISA fiduciary with control over plan assets commingled in the bankruptcy estate, has standing to bring an ERISA action on behalf of participants against a former fiduciary of a plan; and that the defense of in pari delicto cannot be asserted against an innocent ERISA fiduciary seeking to remedy a breach caused by the defendant fiduciary. The Secretary participated in oral argument on March 1, 2012. On June 8, 2012, the court issued a decision agreeing with the Secretary on the issues addressed, but otherwise ruling against the plaintiff on the question of the bank's fiduciary status and ERISA preemption of the state law claims. Plan Benefits Security Division

Mozingo v. Trend Personnel Services (10th Cir.)

This case is an appeal from a dismissal of a benefits and fiduciary breach case based on forum selection provisions contained in two employment agreements (not in the actual plan documents). The Secretary has argued previously that such provisions are not enforceable and conflict with ERISA's venue provision and with the statute's general aim to remove jurisdictional barriers to suit. The plaintiffs-appellants filed their brief on May 18, 2012, and the Secretary filed a brief on May 25, 2012, arguing that forum selection provisions of this sort are generally impermissible under ERISA. The Secretary participated in oral argument on September 19, 2012. At the court's request, the Secretary filed a supplemental brief on October 1, 2012. The court issued a decision on December 6, 2012, without deciding the issue that the Secretary had briefed. Plan Benefits Security Division

National Rural Electric Cooperative Association Settlement

In July 2012, the Secretary and the National Rural Electric Cooperative Association ("NRECA") reached an agreement resolving alleged violations arising from the Secretary's investigation of three association-sponsored employee benefit plans, the NRECA Retirement Security Plan, 401(k) Plan, and Group Benefits Plan. The investigation found that the association selected itself as a service provider to the plans, determined its own compensation and made payments to itself that exceeded the NRECA's direct expenses in providing services to the plans. Pursuant to the settlement, the NRECA agreed to restore $27,272,727 to the plans and agreed not to provide administrative services to the plans without entering into a written contract or agreement approved by an independent fiduciary. The independent fiduciary must determine whether the use of the NRECA to provide administrative services to the plans is prudent and reasonable, determine the categories of direct expenses that the NRECA may charge to the plans and the methods of calculating those expenses, and monitor the NRECA's compliance with certain terms of the agreement. The agreement also provides that during a 60-month period following the implementation date, the NRECA shall discount the amount of permissible direct expenses for which it seeks reimbursement from all three plans in the amount of $22,727,272. The balance of the settlement payment, $4,545,455, was paid by the NRECA directly to the NRECA 401(k) Plan. The NRECA also agreed to pay $2,727,276 in civil penalties. The NRECA is a nonprofit trade association for electric power cooperatives. The sponsored plans are open to members of the trade association as well as the association's employees. Philadelphia Office

In re New England Building Materials, LLC (Bankr. D. Me.)

On April 4, 2012, the Secretary filed a proof of claim for over $800,000 in unpaid medical claims owed to participants in the New England Building Materials Health Plan. The debtor, New England Building Materials, LLC, is in the process of paying all claims as priority payments with money received from the proceeds of the sale of the debtor. A former officer of the debtor is negotiating partial payments with providers. The debtor is requiring releases for the debtor and the employees upon payment. The debtor has filed an objection to the Secretary's proof of claim on the basis that the debtor owes less than the claim. When all of the claims have been negotiated and paid and all participants have been reimbursed for out of pocket expenses otherwise owed by the plan, the Secretary will settle the claim for the amount paid to the participants. Boston Office

In re Newstarcom Holdings, Inc. (Bankr. D. Del.)

On September 29, 2009, the Secretary filed a limited objection to the Chapter 7 trustee's motion for approval of a settlement agreement between the trustee and Citibank N.A. regarding an adversary complaint that the trustee filed against Citibank for a post-petition transfer of funds to an account that was solely utilized for funding the debtor's health plan. The debtor filed for bankruptcy on January 14, 2008, after which Citibank allegedly initiated a post-petition transfer of funds from Citizen's Bank, which had extended a revolving line of credit with the debtor. Thereafter, the trustee sued Citibank for the return of these funds. The trustee and Citibank entered into a partial proposed settlement whereby Citibank would transfer $292,361.32 to the trustee. The Secretary filed the limited objection to assert that a portion of the funds may contain plan assets. Citizen's Bank objected to the Secretary's request to stay the court's approval of the proposed settlement until the Department concluded its investigation of the debtor's plan. On October 29, 2009, the bankruptcy court adopted a stipulation between the Department, the Chapter 7 trustee, and Citizen's Bank whereby the $292,361.32 would be held in escrow pending the Department's investigation. On December 29, 2011, the trustee filed a Rule 9019 motion and proposed order, seeking court approval of the parties' settlement agreement. The agreement provides that the bankruptcy estate, along with the secured creditor, will release $122,000 to establish a special health claims account that will go towards payment of outstanding health claims by former plan participants and the costs associated with administering the claims. An independent third party will provide notice to all former participants that they may seek relief from this special account, either through satisfaction of a debt they owe or by direct reimbursement for a claim they already paid. By virtue of this special account and related procedures, former participants can seek a recovery far outside the proof of claims deadline of May 2008 and will have priority over any that would be accorded under the Bankruptcy Code. If the eligible claims submitted exceed the amount in the special account, former participants can make claims against the bankruptcy estate. Because the trustee is unilaterally seeking, through his Rule 9019 motion, to have the IRS be bound to the parties' agreement, the Department contacted the IRS to ensure proper and timely notice. On January 11, 2012, the IRS filed an opposition to the motion. Following a hearing, the bankruptcy court issued an order on January 26, 2012 holding the motion in abeyance in order to afford the trustee and the IRS time to resolve their differences. The IRS and the trustee reached a resolution and on May 9, 2012, the bankruptcy court approved the Department's agreement with the trustee and Citizens. An independent fiduciary has been engaged to pay the outstanding health claims. Boston Office

Solis v. Rice (N.D. Ohio)

On January 23, 2013, the court entered an amendment to a consent order and judgment, entered November 25, 2003, involving the Ohio Industries, Inc. Group Medical, Dental and Weekly Disability Income Plan and the Ohio Locomotive Crane Co., Inc. Savings Investment Plan. The amendment, which appoints a new independent fiduciary to replace the one who withdrew, provides for the new fiduciary to accept $29,562.83 in funds ($25,314.46 for the Group Medical, Dental and Weekly Disability Income Plan and $4,248.37 for the Savings Investment Plan) distributed from Ohio Industries' bankruptcy case. In addition, the independent fiduciary is to secure unclaimed funds in the name of the plans from the State of Ohio and distribute these assets, along with the bankruptcy funds, to the plans' participants. Cleveland Office

In re Robert Plan Corp. (Bankr. E.D.N.Y.)

This case involves an ongoing dispute with a Chapter 7 trustee over a bankruptcy court's jurisdiction to approve payments to the trustee and his retained professionals for work performed in terminating the debtor's 401(k) plan. On October 26, 2010, the bankruptcy court held that it had core jurisdiction to rule on the fee requests of the trustee and his professionals for their ERISA plan work, but lacked jurisdiction to determine the amount of the fees to be paid using plan assets. On March 1, 2011, the bankruptcy court issued a first interim fee award to the trustee and his professionals in amounts greater than the Secretary believed appropriate, but consistent with the October 2010 Order, and refused the trustee's request to rule on what amounts were payable by the plan. On December 11, 2011, the Secretary filed an objection to a second interim fee request by the trustee and his law firm and a final fee application by the auditor and pension consultant assisting the trustee. After hearings and settlement discussions, the bankruptcy court issued a decision on August 20, 2012, in which it overruled the Secretary's objections and granted the second fee applications. Departing from the terms of the 2010 Order, which had stated that "[a]ny order awarding fees would contain no determination of whether Plan funds could be used to satisfy the award," the bankruptcy court expressly provided in the August 2012 decision that the trustee could use plan funds to pay the professionals. The bankruptcy court thereby effectively asserted jurisdiction over the ERISA plan and its assets. The interim fee award to the trustee of $132,378.24 resulted in an effective hourly rate of approximately $2000 per hour. As a portion of the relief granted in the 2012 decision was interlocutory, on September 4, 2012, the Secretary filed a motion for leave to appeal to the district court. On September 14, 2012, the trustee filed a brief in opposition to the Secretary's motion. On September 27, 2012, the Secretary filed a motion for leave to file a reply brief, to which the trustee filed a brief in opposition on October 4, 2012. The district court has not ruled on the Secretary's right to file a reply brief. The court took the matter under advisement after a hearing on February 1, 2012 and has not yet issued an opinion. Plan Benefits Security Division

In re Thelen LLP (Bankr. S.D.N.Y.)

Thelen LLP, a major national law firm and Chapter 7 debtor, was the sponsor and plan administrator for three ERISA-covered plans: a 401(k) plan, a defined benefit plan, and a cash balance plan. Pursuant to section 704(a)(11) of the Bankruptcy Code, Thelen's Chapter 7 trustee became obligated to fulfill the plan administrator role. On or about July 13, 2010, the trustee filed a motion seeking payment from the plans for legal services provided by Fox Rothschild LLP ("Fox"), the trustee's law firm. The trustee filed motions on January 13, 2011, and October 13, 2011, seeking: (i) authorization to terminate the plans; (ii) authorization for the plans to pay for services provided by professionals retained by the trustee; (iii) the retention of an independent fiduciary to terminate the plans and pay retained professionals from plan assets; and (iv) to quash an administrative subpoena issued by the Secretary to the trustee. On March 17, 2011, and February 10, 2012, the Secretary objected to the jurisdiction of the bankruptcy court to approve the payment of the fees and expenses of Fox and the other professionals, the appointment of the independent fiduciary, and the quashing of the subpoena. On October 20, 2011, the PBGC filed an objection to the appointment of an independent fiduciary and the failure of the trustee to sign a trusteeship agreement for the transfer of the defined benefit plan to the PBGC for termination. On May 17, 2012 a consensual order was entered by the district court providing for, among other things: (i) a withdrawal of the reference of the motions from the bankruptcy court to the district court; (ii) the appointment of an independent fiduciary for the cash balance and the 401(k) plans to terminate those plans and to pay the plan professionals (including Fox); (iii) fixing Fox's fees at $125,000, less than half of what Fox would have claimed; (iv) the assignment of the defined benefit plan to the PBGC; and (v) the Secretary's release of her prohibited transaction claims and certain other claims against the trustee and Fox. The independent fiduciary is now in the process of terminating the cash balance and 401(k) plans. Plan Benefits Security Division