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News Release

Labor Department Resolves Suit Against Erickson Cosmetics President Over Health Plan Violations

Archived News Release — Caution: Information may be out of date.

Chicago, Illinois - The U.S. Department of Labor obtained a court judgment in which the president of Chicago-based Erickson Cosmetics Company agreed to pay $20,978.66 to the welfare plan and its independent fiduciary who will ultimately pay a pro-rata share of the welfare plan’s outstanding medical claims.

The judgment removes Wallace Erickson as the plan administrator and permanently bars him from serving plans governed by the Employee Retirement Income Security Act (ERISA). The judgment also appoints M. Larry Lefoldt of Ridgeland, Mississippi as the independent fiduciary.

On July 2, 2001, the court entered a default judgment against the Erickson Cosmetics Company, in which it appointed Lefoldt to oversee the company’s 401(k) plan. On November 14, 2001, the court entered a judgment ordering controller William Bianucci to pay $7,894.12 to the 401(k) plan as restitution for his failure to forward employee contributions and loan payments to the plan. To date, the Labor Department’s actions have resulted in recovery of $67,511.04 for the plans and participants.

This judgment resolves a suit filed on December 27, 2000 against the company, Erickson and Bianucci for allegedly benefiting from the use of the plans’ assets, thereby resulting in losses to the 401 (k) plan and failure to remit the medical plan’s premiums. The suit also alleged that Bianucci abandoned the 401(k) plan in May 1999 when he resigned his position as a sole trustee of the plan. As a result, participants were unable to obtain distributions from their individual plan accounts.

Erickson Cosmetics ceased operations in April 1999 and was involuntarily dissolved by the State of Illinois in 2000. The pension plan has 87 participants and approximately $650,000 in assets.

The court action, entered in federal district court in Cook County, Illinois, resulted from an investigation conducted by the Chicago Regional Office of the department’s Pension and Welfare Benefits Administration (PWBA).

“Our action reaffirms the department’s commitment to protect the benefits promised by employers,” said Kenneth Bazar, Chicago’s regional director. “Employers and workers can reach us at 312.353.0900 for help with problems involving private sector pension and health plans.”

(Chao v. Erickson Cosmetics Company, et al.
Civil Action No. 00C 8108)

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

Employee Benefits Security Administration
January 11, 2002
Release Number