DALLAS – The U.S. Department of Labor has sued Calypso Waterjet Systems Inc. of Dallas and its officers for allegedly failing to forward employee contributions and loan repayments to the company’s 401(k) plan and for misusing plan assets for the benefit of the company in violation of the Employee Retirement Income Security Act.
Calypso Waterjet Systems manufactured waterjet systems that were used to cut different types of material, including stone, metal and plastics. The company had 59 employees in January 2009 when it laid off all of the employees. On Feb. 3, 2009, the company ceased operations.
The lawsuit, filed in the U.S. District Court for the Northern District of Texas-Dallas Division, alleges that the company, Denis Lufkin and Johnnie Howard failed to timely segregate and remit to the plan employee contributions and loan repayments between Jan. 1, 2007, and Jan. 1, 2009. At the time of the violations, Howard and Lufkin were the owners and officers of the company. The defendants also allegedly failed to properly administer the plan and used plan assets to benefit themselves.
The suit seeks a court order to require that Lufkin, Howard and the company restore to the plan all losses with interest. The suit also asks the court to remove Lufkin and Howard from their positions with the plan after the plan is terminated and the assets are disbursed, and to permanently bar them from serving as fiduciaries or service providers to any plan governed by ERISA in the future.
“Plan officials have a duty to manage and protect employees’ benefit plans and their assets,” said Roger Hilburn, the Dallas Regional Office director of the department’s Employee Benefits Security Administration, which investigated this case. “Our action today is designed to restore plan assets that were not properly preserved for the company’s workers.”
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 Dallas office at 972-850-4500 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. Calypso Waterjet Systems Inc.
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