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US Labor Department sues Westbrook, Conn., company and president to restore misused 401(k) plan assets
NEW HAVEN, Conn. – The U.S. Department of Labor has sued Custom Navigation Systems Inc. of Westbrook, Conn., and company president Steven G. Gill for failing to forward $70,000 in employee contributions and loan repayments withheld from employees’ paychecks to the company’s 401(k) plan, in violation of the Employee Retirement Income Security Act.
The lawsuit, filed in the U.S. District Court for the District of Connecticut, followed an investigation by the Labor Department’s Employee Benefits Security Administration. The suit alleges that defendant Steven G. Gill allowed the company to withhold plan contributions from employee wages but then failed to forward those contributions to the plan during the period from 2002 to 2008.
Gill and the company allegedly diverted employee contributions and participant loan payments for use by the company for purposes other than to pay benefits. At the time of the violations, Gill was the plan’s trustee and the company served as the plan administrator.
“These defendants failed in their fiduciary duties when they allowed plan assets to be used by the company that sponsored the plan,” said Edward Maloney, EBSA’s acting regional director in Boston, Mass. “ERISA requires that plan assets be used only to benefit plan participants and beneficiaries.”
The suit asks the court to order the defendants to restore all losses with interest incurred by the plan, undo any prohibited transactions and permanently prohibit Gill from serving as a fiduciary to any ERISA-covered employee benefit plan in the future.
This case, investigated by EBSA’s Boston Regional Office, is part of EBSA’s employee contribution project to safeguard workers’ contributions to 401(k) and health benefit plans. Employers and workers can contact the Boston EBSA office at 617-565-9600 or toll-free at 866-444-3272 for help with any problems relating to private sector pension and health plans. Additional information can be found at http://www.dol.gov/ebsa.
Solis v. Custom Navigation Systems Inc. and Steven G. Gill
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