CHICAGO – The U.S. Department of Labor has filed a complaint in federal court seeking to restore a total of $63,582.14 in health care premiums and retirement plan contributions withheld from the paychecks of employees at several companies that are part of the JJD Industries group in Schiller Park, Ill.
The lawsuit, which is based on the findings of an investigation by the department’s Employee Benefits Security Administration, alleges that John Dombek III – president, fiduciary and part owner of JJD Industries – improperly managed the benefit plans’ assets in violation of the Employee Retirement Income Security Act. Additionally, John Dombek Jr., a co-fiduciary of the Wisconsin Tool & Stamping Co. 401(k) plan, is alleged to have improperly managed assets of that plan by failing to monitor the remittance of employee contributions.
“Failing to properly administer health insurance premiums demonstrates a total lack of concern for employees and their families,” said Steve Haugen, director of EBSA’s Chicago Regional Office. “Incorporating employees’ voluntary salary contributions into the general assets of a company and failing to forward them to the retirement plan are violations of both the law and the trust workers have placed in their employers. The Labor Department is committed to taking action that leads to workers obtaining their rightful benefits.”
JJD Industries sponsored a group health plan with Blue Cross and Blue Shield of Illinois to provide health and dental benefits to the employees of its related companies, including Wisconsin Tool & Stamping Co., J.D. Acquisition Corp., Akorat Metal Fabricators Inc./Smithco Fabricators Inc. and Pavo Inc./Injection Plastics Corp. The companies paid their premiums separately, and premiums were partially funded through weekly employee payroll deductions.
The suit alleges that employee contributions for premiums totaling $41,475.59 were withheld but not remitted to the health care provider, and instead were retained in the general funds of the individual companies. The amounts withheld include: $15,867.85 from the period of May 6-Aug. 20, 2010, by Akorat Metal Fabricators/Smithco Fabricators; $5,084.64 from April 5-Aug. 20, 2010, by J.D. Acquisition; and $20,381.13 from May 3-Aug. 20, 2010, by Wisconsin Tool & Stamping. On June 1, 2010, Blue Cross cancelled the health insurance policy for these companies for failure to pay premiums. Additionally, Pavo/Injection Plastics withheld $141.97 from employees’ pay from Sept. 3-17, 2010, that was not forwarded to Blue Cross, resulting in the provider cancelling that policy on Oct. 1, 2010.
The suit further alleges that from Jan. 1, 2008, through Sept. 17, 2010, Wisconsin Tool & Stamping withheld $20,176.57 in contributions from employees’ paychecks and never remitted them to the company’s 401(k) profit-sharing plan, but instead commingled the funds with its general assets. Additionally, during the same time period, the company withheld an additional $6,610.09 from employees’ paychecks and failed to timely remit that amount to the plan.
Additionally, Midland Chutes, doing businesses as J.D. Acquisition, withheld $1,929.98 in contributions from employees’ paychecks from Jan. 1, 2008, through March 23, 2011, that never was remitted to the company’s 401(k) plan but retained in the company’s general funds.
The complaint seeks the restoration of all losses for which the defendants are liable, including appropriate interest. It also seeks an order to require the defendants to correct the prohibited transactions and disgorge any profits received as a result of their actions. Additionally, it seeks to permanently enjoin Dombek Jr. and Dombek III from serving as fiduciaries or service providers to any employee benefit plan subject to ERISA. Finally, it seeks the appointment of an independent fiduciary to oversee the termination of the 401(k) plans of both Wisconsin Tool & Stamping and J.D. Acquisition, as well as the distribution of plan assets to eligible participants.
Dombek Jr. and Dombek III have both filed for Chapter 7 bankruptcy protection. The secretary of labor has filed a separate complaint to determine dischargeability of debt and seek the enforcement of any monetary judgment against both individuals to restore the funds to the employee benefit programs.
The case is being litigated by the Labor Department’s Regional Office of the Solicitor in Chicago. For help with problems related to private sector retirement and health plans, employers and workers can reach EBSA’s Chicago office at 312-353-0900 or toll-free at 866-444-3272. Additional information about the agency can be found at www.dol.gov/ebsa.
Solis v. John Dombek Jr., John Dombek III, Wisconsin Tool & Stamping Co. 401(k) Profit Sharing Plan & Trust, J.D. Acquisition 401(k) Profit Sharing Plan and Trust, and the JJD Industries Group Health Plan
Civil Action Number: 1:12-cv-02992
U.S. Department of Labor news materials are accessible at www.dol.gov. The information above is available in large print, Braille, audio tape or disc from the COAST office upon request by calling 202-693-7828 or TTY 202-693-7755.