U.S. Labor Department sues Crestview, Florida, medical group, plan trustees and Iowa accounting firm over misuse of pension plan assets

Crestview, Florida – The U.S. Department of Labor has sued Robert S. Caputo, his medical group, trustees of the group’s pension plan, the plan’s accounting firm, and an accountant for improperly using $800,000 in plan assets to pay company expenses, in violation of the Employee Retirement Income Security Act.

Filed in U.S. District Court for the Northern District of Florida-Pensacola Division, the lawsuit alleges that Caputo, as a trustee to the plan, used plan assets as if they were his personal property between 2000 and 2006. According to the suit, the Employee Benefits Security Administration found that 97 percent of the plan’s assets were listed as receivables, but were actually personal expenses and loans.

The suit also alleges that the defendants violated ERISA by allowing the plan to purchase stock from participants at inflated prices, failed to allow older workers to diversify their account balance as required by law, and allowed the plan to engage in a number of recordkeeping errors. The department contends the misuse of the company’s assets reduced the value of the company, which was owned by the employee stock ownership plan, and the fiduciaries failed to take the necessary corrective actions.

According to the suit, trustee Glenn Bankert failed to take action to remedy Caputo’s misuse of company funds. Additionally, Oden and Thielking, an accounting firm located in West Des Moines, Iowa, that annually valued the company’s stock, allegedly knew or should have known that the price of the stock was inflated.

“Our legal action seeks to restore assets meant to benefit plan participants and beneficiaries. The law specifically prohibits companies that sponsor plans from using plan assets to enrich themselves, thereby jeopardizing the retirement benefits of workers,” said Phyllis C. Borzi, assistant secretary of the Employee Benefits Security Administration.

The Labor Department is seeking a court order requiring the defendants to restore to the plan all losses with lost interest or opportunity costs, offset individual plan accounts of the defendants for losses owed to this plan, remove them as fiduciaries to the plan and permanently bar them from serving in a fiduciary capacity to any plan subject to ERISA. The department also is seeking the appointment of an independent fiduciary to oversee the plan.

Robert S. Caputo D.O. is a for-profit medical group in Crestview, Florida, that specializes in obstetrics and gynecology.

The case was investigated by EBSA’s Atlanta Regional Office. Employers and workers can reach EBSA’s Atlanta Regional Office at 404.302.3900 or toll-free at 866.444.3272 for help with problems relating to private sector retirement and health plans. In fiscal year 2009, EBSA achieved monetary results of $1.3 billion related to pension, 401(k), health and other benefits for millions of American workers and their families. For more information, see www.dol.gov/ebsa.

Solis v. Robert S. Caputo, D.O., P.A.
Civil Action File Number 3:10-CV-00210-MCR-EMT

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