U.S. Labor Department sues officers of Sheboygan, Wis., business to restore delinquent contributions to company’s profit-sharing plan

Archived News Release — Caution: Information may be out of date.

Sheboygan, Wisconsin - The U.S. Department of Labor has sued the majority owner of New Beginnings Inc. in Sheboygan for failing to timely forward employee contributions to the company’s profit-sharing plan and for transferring plan assets to the general operating account of the company.

“The Labor Department will act when plan fiduciaries fail to carry out their duty to protect the retirement plan assets held on behalf of participants,” said Steve Haugen, director of the Chicago Regional Office of the department’s Employee Benefits Security Administration (EBSA).

The lawsuit alleges that Gary Bruce Larson, as trustee and fiduciary of the profit-sharing plan, and New Beginnings Inc. failed to remit employee contributions to the plan in a timely manner during periods from 2002 through 2004, even though assets were deducted from workers’ paychecks. The suit also alleges that Larson caused the plan to be terminated on April 7, 2005, but funds accrued to the plan were placed in the company account and some used to pay company expenses, leaving five participants without full distribution of their account balances in the profit-sharing program. The Labor Department alleges these actions to be violations of the Employee Retirement Income Security Act (ERISA).

The suit seeks to require that Larson and New Beginnings Inc. make good any losses to the plan resulting from their fiduciary breaches, to permanently enjoin Larson from serving as a fiduciary on other ERISA-covered plans and to correct any prohibited transactions. Additionally, the suit asks that the court appoint an independent fiduciary to administer the plan.

Employers with similar problems who are not yet the subject of investigations by EBSA may be eligible to participate in the department’s Voluntary Fiduciary Correction Program (VFCP). Participation requires employers to make workers whole but allows them to avoid EBSA enforcement actions and civil penalties as well as any applicable excise taxes. For more information about the VFCP, see www.dol.gov/ebsa.

The suit, filed in federal district court in Chicago, resulted from an investigation conducted by EBSA’s Chicago Regional Office. Employers and workers can reach the Chicago office at 312.353.6976 or toll-free at 1.866.444.EBSA (3272) for help with problems relating to private sector retirement and health plans. In fiscal year 2006, EBSA achieved monetary results of $1.4 billion related to pension, 401(k), health and other benefits for millions of American workers and their families.

Chao v. New Beginnings
Civil Action Number 2:07cv373

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