Judge orders fiduciary to restore more than $111K to the Applied Technology Systems Inc. Retirement Plan in Cleveland, Ohio

Date of Action: Feb. 8, 2016

Type of Action: Default judgment

Names of Defendant: Applied Technology Systems Inc. and Clark V. Hayes, individually and as fiduciaries to the Applied Technology Systems Inc. Retirement Plan, and the Applied Technology Systems Inc. Retirement Plan.

Allegations: A judgment by default was entered against Hayes, the company, and the plan on July 29, 2015, in the United States District Court, Northern District of Ohio with respect to Hayes’ failure to segregate and remit employee contributions to the Applied Technology Systems Inc. Retirement Plan in violation of the Employee Retirement Income Security Act.

Subsequent to the complaint filing resulting in the first default judgment, Hayes, in his capacity as a fiduciary to the plan, improperly transferred $210,662.18 of the plan’s assets from a plan account to an account in the name of the company and then used $98,581.75 of the amount for non-plan purposes.  In order to protect the remaining assets of the plan, the first default judgment signed Sept. 17, 2015, appointed an independent fiduciary to take control of the assets held in the company account.

Resolution: The second judgment orders Hayes to restore $111,331.71 to the plan. This amount represents the improperly transferred plan assets that the independent fiduciary could not recover and lost opportunity costs. In addition, the judgment bars Hayes and the company from serving as a fiduciary or service provider to any ERISA covered employee benefit plan in the future.

Court: United States District Court for the Northern District of Ohio

Docket Number: 5:15-cv-01264-JRA

Employers and workers can reach EBSA toll-free at 866-444-3272 for help with problems related to private sector retirement and health plans.  Additional information can be found at http://www.dol.gov/ebsa/.