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US Labor Department sues Houston employee staffing company and owner for misuse of 401(k) plan assets
HOUSTON – The U.S. Department of Labor has sued NSC Cos. Inc. of Houston and its owner for failing to remit or timely forward employee contributions to the company’s 401(k) plan and using the plan’s assets for their own benefit, in violation of the Employee Retirement Income Security Act.
The department’s lawsuit alleges that the employee leasing company and owner Patricia A. Thompson violated ERISA by failing to remit and timely forward employee contributions to the 401(k) plan, to take action to protect or collect employee contributions owed to the plan and to properly administer the plan. The defendants allegedly used the assets to benefit the company. The suit was filed in the U.S. District Court for the Southern District of Texas-Houston Division.
The department is seeking a court order to require that the defendants repay to the plan all losses with interest, correct any transactions prohibited by law and be permanently barred from serving in a fiduciary capacity to any plan governed by ERISA in the future. The suit also asks the court to appoint an independent fiduciary to oversee assets recovered for the plan, distribute the money to eligible participants and terminate the plan.
“One of employers’ most important responsibilities as a fiduciary has is to deposit money from workers’ wages into their 401(k) accounts on time,” said Roger Hilburn, director of the department’s Employee Benefits Security Administration Dallas Regional Office, which investigated the case. “This case demonstrates our commitment to take legal action to protect the hard-earned benefits of workers.”
NSC furnished IT professional staffing services. The company downsized in August 2009 after experiencing financial difficulties, and it is unclear whether the company is still operational. As of November 2009, the plan had 46 participants and $230,548.16 in assets, the latest data available.
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, Texas, 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. NSC Companies Inc.
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