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News Release

EBSA Press Release: Labor Department Recovers $22 Million for 401[K] Plans and Begins Hotline for Workers [03/31/1997]

Archived News Release — Caution: Information may be out of date.

For more information call: (202) 219-8921

A nationwide crackdown on 401(k) abuse has resulted in the recovery of nearly $22 million for 40,800 workers, President Bill Clinton announced today.

The $22 million recovery is part of a national enforcement project to reduce misuse of 401(k) contributions and ensure pension security for all Americans. Under the project, department investigators discovered that some employers were misusing or borrowing their employees' 401(k) contributions for personal or corporate enrichment.

Clinton also introduced a toll-free publication hotline for workers to access vital information to help them understand their pension rights and monitor their pension plans.

The toll-free "800" number is part of the department's Retirement Savings Education Campaign to raise public awareness about retirement savings and pension protection. Persons looking for employee benefit literature can call the hotline at 800/998-7542.

"The Clinton Administration has worked tirelessly to ensure workers' pensions are not misused," said Acting Secretary of Labor Cynthia A. Metzler. "Because of this administration's efforts, workers' retirements are safer."

"I'm pleased to report that the private pension system with $3.5 trillion in assets is essentially safe and financially sound," Metzler said. "Investigations conducted by the Labor Department indicate only a small percentage of employers are misusing workers' 401(k) money. The vast majority of plans are honestly, responsibly and safely managed. "

Since starting the project in 1995, the Pension and Welfare Benefits Administration (PWBA) has opened 1,672 cases; 746 have been closed 262 cases with violations and monetary recoveries. The $22 million includes monetary recoveries from these closed cases, cases that are still open and the voluntary compliance pension payback program. In addition, the agency has received thousands of calls from workers asking about their 401(k) plans. Often complaints from workers give the department the first warning sign of a problem with a plan.

Recent cases investigated by the department:

  • The Atlanta Regional Office recovered $26,445 in lost earnings for 119 participants covered by the 401(k) plan of an architectural firm in Marietta, Ga. The case was opened as a result of a participant complaint.
  • In the Boston Regional Office, $2.4 million was recovered for 1,045 participants of a nationwide health care provider in Avon, Conn. For 11 months in 1996, contributions were withheld from workers' wages, but not transmitted to the plan.
  • A Chicago Regional Office case recovered $27,392 in delinquent contributions from a South Bend, Ind., trucking company. After the department discovered that the company was in bankruptcy, the court was petitioned to authorize payment of delinquent contributions owed to the 401(k) plan.
  • The Cin cinnati Regional Office pursued a criminal case that resulted in a 4-month prison sentence and supervised release for the former president of a Louisville, Ky., company after his indictment for embezzling plan money. He pleaded guilty in January 1997 to embezzling $68,933 in employee contributions from the company's 401(k) plan. The plan covered 16 participants and had $170,825 in assets.
  • The Los Angeles Regional Office recovered $569,000 in employee contributions plus $446,578 in employer matching contributions from a Honolulu, Hawaii, company for 101 plan participants. In addition, the office recovered $32,652 in earnings attributable to late contributions.
  • In the New York Regional Office, $27,000 was recovered for participants covered by the 401(k) plan of an employee benefit consulting firm. The firm deducted the money from employees' paychecks but failed to remit it to the third-party administrator.
  • A criminal investigation conducted by the Philadelphia Regional Office resulted in an indictment against Joseph Guckin, the president and sole owner of Penjerdel Refrigeration Co. in Philadelphia. Guckin failed to remit $43,969 in employee contributions to the plan over the period 1990 through 1991. He pleaded guilty in November 1996 to one count of converting plan assets to the use of his business.

In addition to conducting ongoing investigations, PWBA spearheaded the Retirement Savings Education Campaign to raise public awareness about what workers need to do to prepare for retirement and monitor their pension money. One publication, titled "Protect Your Pension," is a quick reference guide designed to help workers understand their plans and gives tips on warning signs they should look for to guard plan money from misuse.

Archived News Release — Caution: Information may be out of date.

Employee Benefits Security Administration
March 31, 1997
Release Number