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US Labor Department sues Utah company and owner to recover plan assets for abandoned 401(k) plan
SOUTH JORDAN, Utah - The U.S. Department of Labor sued Fooptube LLC of South Jordan, and its owner, David Rushton, for failing to forward delinquent employee contributions owed to the company's 401(k) profit sharing plan in violation of the Employee Retirement Income Security Act.
The department's lawsuit alleges that between Feb. 15 and Nov. 15, 2008, the defendants withheld $104,778.05 in employee contributions that were retained with the general assets of the company and never forwarded to the plan, in violation of their fiduciary duties under ERISA. The lawsuit also alleges that between Jan. 15 and Dec. 15, 2007, the defendants failed to forward $2,532.86 withheld from participants' wages and untimely forwarded $132,463.60 in contributions deducted from participants' paychecks.
The suit contends that the plan and its participants suffered lost interest earnings because of the defendants' improper actions. As a result, $7,497.22 in lost interest is due and owed to the plan as of the date of filing.
In addition, the defendants ceased paying the plan's third party administration fees, effectively discontinuing servicing of the plan as of April 19, 2010. As a result, the plan has been abandoned, leaving participants without access to their retirement money. The plan covered 94 employees and had total assets of $156,491.74 as of May 7, 2010.
The suit seeks a court order requiring the defendants to restore all losses with interest and undo all transactions prohibited by law. The suit also asks the court to remove David Rushton and Fooptube as fiduciaries to the Fooptube 401(k) Profit Sharing Plan; appoint Saakvitne Law Corp. to distribute the assets to participants; and permanently bar the defendants from serving in a fiduciary capacity to any plan governed by ERISA.
"Companies and their executives have an obligation to ensure that plan assets are held in trust to pay future benefits," said Jean Ackerman, director of the department's Employee Benefits Security Administration San Francisco Regional Office, which investigated the case. "This case demonstrates our commitment to take legal action to protect workers' benefits."
This case is part of EBSA's employee contribution project to safeguard workers' contributions to 401(k) and health benefit plans. Employers and workers can reach EBSA's San Francisco office at 415.625.2481 or toll-free at 866.444.3272 for help with problems relating to private sector retirement and health plans. Additional information can be found at http://www.dol.gov/ebsa.
Solis v. Fooptube LLC
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