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US Labor Department files suit to recover funds for participants in Milwaukee-based Omni Resources Employee Stock Ownership Plan
MILWAUKEE – The U.S. Department of Labor has filed a lawsuit in U.S. District Court to recover funds from the fiduciaries of Omni Resources Inc., a Milwaukee-based information technology company. The suit alleges that Omni Resources’ plan fiduciaries authorized the sale of the company’s stock to the Omni Resources Employee Stock Ownership Plan for $13.7 million, which far exceeded its fair market value. The sale resulted in personal financial gain to company owner Veronica Mueller, who was also a fiduciary to the plan.
“When fiduciaries are responsible for retirement plan assets, they have to act with undivided loyalty to the plan participants and make sure that the plan receives full value for its money,” said Donna Seermon, Employee Benefits Security Administration’s acting regional director in Chicago. “The department is committed to making sure employees receive their rightful benefits.”
The investigation, by the Chicago Regional Office of the department’s Employee Benefits Security Administration, focused on a December 2008 ESOP stock purchase. The suit names Mueller, who owned 40 percent of Omni Resources’ stock, and husband Roger Mueller, who founded the company in 1984. The Muellers were the only members of Omni’s board of directors and were also the plan trustees at the time of the transaction. The remaining 60 percent of the company’s stock was held in a trust for each of their three children. The trusts are also named defendants in the lawsuit because of the stock sold by each.
Milwaukee-based Alpha Investment Consulting Group, which executed the stock purchase agreement as a special fiduciary to the ESOP, has also been named as a defendant for failing to protect the interests of the plan. The suit seeks to require the fiduciaries to restore all losses suffered by the ESOP, and to require the defendants to restore all profits and financial benefits received by them.
At the time of the stock sale, Omni Resources employed approximately 212 information technology consultants and operated branches in Appleton, Madison and Milwaukee, as well as Minneapolis, Minn. The company provides information technology staffing options.
After conducting its investigation, the department concluded that, as a result of the design of the transactions and the fiduciary breaches of the Muellers and Alpha Investment Consulting Group, the stock purchases were not for the primary benefit of participants and did not promote employee ownership of Omni Resources. As a result, the department concluded that the Muellers and Alpha Investment Consulting Group were responsible and liable for violations of the Employee Retirement Income Security Act.
The lawsuit also seeks to remove the Muellers and Alpha Investment Consulting Group as fiduciaries and service providers of the ESOP and to permanently bar them from serving as fiduciaries or service providers to ERISA-covered plans in the future.
As of Dec. 31, 2012, the most recent Form 5500 filing, the plan had 83 active and 113 total participants and assets of $1,761,490.
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.
EBSA protects the retirement, health and other workplace-related benefits of America’s workers, retirees and their families. The agency oversees approximately 684,000 active private sector retirement plans, 2.4 million health plans and other plans that provide benefits to more than 141 million Americans. Collectively, these plans hold more than $7.6 trillion in assets. Additional information can be found at www.dol.gov/ebsa.
Perez v. Veronica Mueller, Roger Mueller, Alpha Investment Consulting Group LLC, The Carey V. Mueller 1996 Trust, the Craig M. Mueller 1996 Trust, The Christopher L. Mueller 1996 Trust, the Omni Resources Inc. Employee Stock Ownership Plan, et al.
Civil action number: 2:13-cv-01302
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.