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News Release

Colorado Leasing Firm And Owner Barred From Handling Plan Busi

Archived News Release — Caution: Information may be out of date.

PROSERA CMI, Inc., an employee leasing firm formerly headquartered in Englewood, Colo., affiliated firms and their owner were removed from their positions with the firm’s health plan and permanently barred from serving or doing business with employee benefit plans governed by federal pension law under a court judgment obtained by the U. S. Department of Labor.

The judgment — entered Monday, April 20 — also provides that $90,213.89 in restitution be transferred to the plan by owner Jerry Burnett, his wife Diane Burnett, PROSERA CMI, Inc., PROSERA Business Solutions, LLC, PROSERA Administrators, LLC, and PROSERA Mobile Factory Systems, LLC.

PROSERA CMI purports to be an employee leasing firm even though client employers retained complete control over their employees. The leasing firm provided for a fee a package of benefits which included payroll services, health benefits, and workers compensation or occupational injury insurance coverage. The company marketed its services to employers located in the Denver area.

On Nov. 13, 1997, a federal court issued a temporary restraining order appointing an independent fiduciary to manage, terminate and distribute the plan’s assets. The court order also removed Jerry Burnett and PROSERA CMI from their positions with the plan and barred them from doing business or receiving compensation from plans governed by the Employee Retirement Income Security Act (ERISA).

The Labor Department sued Burnett and other defendants for violating ERISA requirements. Burnett and PROSERA CMI allegedly:

  • failed to conduct actuarial or other inquiries as to the appropriate levels of contributions to be paid by employers, the solvency of PROSERA and the plan’s ability to pay benefit claims and benefits or the appropriate levels of reserves and insurance needed to fund benefits;

  • commingled premiums paid by employers and workers for health and workers compensation benefits with the assets of the company and diverted plan money to the use of Burnett;

  • transferred plan assets to relatives since July 1994 to pay for automobiles and related services, credit card bills for himself and family members; and

  • used plan money to make payments or loans to himself, the company and its affiliates.

The judgment resulted from an investigation conducted by the Kansas City Regional Office of the Department’s Pension and Welfare Benefits Administration into alleged violations of ERISA.

(Herman v. Burnett)
Civil Action No. 97-K-2723

U.S. Department of Labor news releases are accessible on the Internet. The information in this news release will be made available in alternate format upon request (large print, Braille, audio tape or disc) from the Central Office for Assistive Services and Technology. Please specify which news release when placing your request. Call 202.693.7773 or TTY 202.693.7755.

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

Phone Number: 202.219.8921

Employee Benefits Security Administration
April 20, 1998
Release Number
USDL: 98