News Release
Federal court orders coal producer retirement plan trustees to pay $637K in restitution for unremitted contributions, unlawfully diverted funds
MILTON, WV – The U.S. Department of Labor obtained a consent judgment and order in federal court requiring the trustees of coal producer Blackjewel LLC’s 401(k) plan to pay $637,014 in equitable restitution after an investigation found they violated fiduciary duties under the Employee Retirement Income Security Act of 1974.
The court’s action followed an investigation by the department’s Employee Benefits Security Administration that determined from January 2017 to January 2019, former Blackjewel LLC Chief Executive Officer Jeffrey A. Hoops, Chief Financial Officer Drew Kesler and Controller Donald P. Hetrick, who served as plan administrators and fiduciaries, failed to forward elective employee contributions and mandatory matching contributions to employees’ 401(k) retirement plan accounts in the months leading up to Blackjewel’s declaration of Chapter 11 bankruptcy on July 1, 2019. Instead, the defendants unlawfully diverted the contributions to pay for company expenses, in violation of their fiduciary duties under ERISA.
Under the judgment, the trustees must remit $435,519 in equitable restitution to the independent fiduciary appointed to act on behalf of the plan. The amount represents $423,589 in employee contributions and $11,929 in interest on those contributions. Additionally, they must remit up to an additional $201,494, which represents missing employer contributions to the plan and additional equitable restitution for costs and expenses associated with the appointment of the independent fiduciary.
“As fiduciaries of the Blackjewel LLC 401(k) plan, the trustees were responsible for properly managing contributions but instead intentionally chose unlawful and reckless conduct, which is unacceptable,” said Employee Benefits Security Administration Deputy Regional Director Norman Jackson in Philadelphia. “The contributions will now be distributed to plan participants and their beneficiaries, where they belong.”
The consent judgment and order entered by the U.S. District Court for the Southern District of West Virginia – Huntington Division granted a motion filed by the department’s Office of the Solicitor and resolves a complaint filed on June 15, 2022. In addition to the restitution, the judgment permanently bars Hoops from serving as a trustee, fiduciary, advisor or administrator to any employee benefit plan governed by ERISA. It also mandates that Kesler take a remedial fiduciary standards course, at his own expense, and assist the independent fiduciary in redressing the harm done to employees by the trustees.
“When plan fiduciaries fail in their obligation to carry out their duties solely for the benefit of plan participants and their beneficiaries, the U.S. Department of Labor will pursue appropriate and effective legal remedies to hold them accountable,” said Acting Regional Solicitor of Labor Samantha Thomas in Philadelphia.
U.S. coal producer Blackjewel previously operated as Revelation Energy LLC. In 2019, both companies jointly filed for Chapter 11 bankruptcy.
View the consent order and judgment.
