Federal court orders defunct Michigan company, CEO, president to restore more than $25K to two employee benefit plans
Date of Action: Oct. 11, 2022
Type of Action: Employee Retirement Income Security Act consent judgement
Company/Owners: Paramount Industrial Machining Inc., Maxwell Schwartz, Sheila Rossmann
Background: On Sept. 10, 2020, the Secretary of Labor filed a lawsuit after the department’s Employee Benefits Security Administration found the now defunct Paramount Industrial Machining Inc., CEO Sheila Rossmann and company president Maxwell Schwartz failed to remit employee voluntary salary deferral contributions and loan repayments to the Paramount Precision Products Inc. 401(k) Plan. EBSA also determined Schwartz failed to remit healthcare premiums to the Paramount Industrial Machining Inc. Welfare Benefit Health Plan. Paramount Industrial Machining Inc. ceased operations in 2017.
Resolution: To resolve the litigation, Judge Laurie J. Michelson in the U.S. District Court for the Eastern District of Michigan, Southern Division, issued a consent order and judgment that requires Schwartz, Rossmann and the company meet the following conditions:
- Schwartz shall restore $7,026, including lost opportunity costs, to the Paramount Precision Products Inc. 401(k) Plan, restore $15,217 in unpaid health care premiums to the Paramount Industrial Machining Inc. Welfare Benefit Health Plan and $3,562 to one individual for unpaid health claims. Finally, the former company president must pay a $5,161 penalty for violations of fiduciary responsibilities.
- Rossmann shall restore $11,553, including lost opportunity costs, to the Paramount Precision Products Inc. 401(k) Plan and is assessed a $2,310 penalty for fiduciary breaches. She also must complete eight hours of education relating to the fiduciary duties imposed under ERISA.
- Rossmann must also terminate the Paramount Precision Products Inc. 401(k) Plan and distribute its assets to eligible participants.
- The $18,578 in restorations made by Rossmann and Schwartz to the Paramount Precision Products Inc. 401(k) Plan shall be credited to the investment accounts of all individuals who were employees of Paramount Precision Products Inc. during the eligible periods.
- Schwartz and Paramount Industrial Machining are enjoined from serving as fiduciaries or service providers to ERISA plans in the future.
Employers and workers can reach EBSA toll-free at 866-444-3272 for help with problems related to private sector retirement and health plans. Learn more about EBSA.