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News Release


Archived News Release — Caution: Information may be out of date.

The trustee of two Lexington, Massachusetts-based employee benefit plans and two officers of the now-defunct Auto Engineering Limited Partnership of Lexington have agreed to restore a total of $115,000 to the company’s employee stock ownership plan (ESOP) in order to conclude several lawsuits filed by the U.S. Department of Labor.

According to James Benages, New England Regional Director of the Labor Department’s Pension & Welfare Benefits Administration, the Department filed suit in 1996 against Stephen McLane, the trustee, as well as Kenneth Fullerton, William Currie and Charles Henninger, who were officials of the former luxury car dealership. He noted that a Department suit had also named Auto Engineering Limited Partnership and Wainwright Bank and Trust Company, which served as a custodian for the company’s profit sharing plan, as defendants at the time. All were charged with violating or participating in violations of the federal Employee Retirement Income Security Act (ERISA), which protects private pensions and employee benefit plans.

The lawsuits alleged, among other things, that the individual defendants were liable under ERISA for participating in and benefitting from illegal transactions in which McLane engaged that resulted in the misuse of plan money, including:

  • depositing assets of the profit sharing plan into a non-plan account for purposes of making undocumented and unsecured loans to Auto Engineering;
  • using plan money as collateral for corporate loans and permitting the bank to use plan assets to offset the company's debt to the bank;
  • improperly loaning plan money to a participant without obtaining proper documentation and subsequently using the loan proceeds to offset a personal debt owed by the participant to the company;
  • failing to properly establish the ESOP, to remit employee contributions to the trust and to allocate shares of company stock purchased through the ESOP to the accounts of participants;
  • not paying benefits owed to participants; and
  • allowing the plan's administrator to not file annual financial and other reports required by the Employee Retirement Income Security Act.

On December 19, 1997, a Partial Consent Judgment was entered which resolved the profit sharing plan component of this case, following the restoration by Wainwright Bank and two officials of Auto Engineering (Fullerton and Currie)of a total of $390,000 to the participants of the profit sharing plan.

The two Partial Consent Judgments signed by U.S. District Judge George O’Toole on March 3, 1999, finally resolve the remaining matters in this case. In one, defendant Stephen McLane agrees to restore to the ESOP a total of $30,000. Even though he is currently in bankruptcy proceedings, this is a non-dischargeable judgment against McLane, meaning that his $30,000 debt to the plan remains payable following the conclusion of his bankruptcy. In the other Partial Consent Judgment, defendants Kenneth Fullerton and William Currie agree to restore to the ESOP a total of $85,000. In both cases, the restored monies will be credited to the accounts of plan participants other than Charles Henninger, William Currie, Kenneth Fullerton and Stephen McLane.

In addition, all of the defendants (except Wainwright Bank and Trust Company) are permanently prohibited from future violations of ERISA, and they are permanently enjoined from exercising any authority or control over any employee benefit plan covered by ERISA in the future. The defendants agreed to entry of these judgments while neither admitting or denying violations of ERISA.

Benages noted that the investigation leading up to the settlement of these lawsuits was conducted by the Boston Regional Office of the Pension & Welfare Benefits Administration of the U.S. Department of Labor.

Herman v. Kenneth Fullerton, et al
CA# 96-11874-GAO

Herman v. Stephen McLane, et al
CA# 96-10622-GAO

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

Contact Name: John M. Chavez
Phone Number: (617) 565-2075

Employee Benefits Security Administration
April 27, 1999
Release Number