EBSA News Release: [03/13/2012]
Contact Name: Michael D'Aquino or Michael Wald
Phone Number: (404) 562-2076 or x2078
Release Number: 12-0417-ATL
US Department of Labor sues Silicon Plains Technologies of Urbandale, Iowa, to restore more than $38,000 to participants' 401(k) plan
URBANDALE, Iowa The U.S. Department of Labor is suing Silicon Plains Technologies Inc. and former CEO Greg McCormick to restore $36,631.88 in employee contributions and $1,943.79 in loan repayments from employees' paychecks that were withheld but never forwarded to the company's 401(k) plan, in violation of the Employee Retirement Income Security Act.
Silicon Plains Technologies was located in Urbandale and provided system design, consultation and custom computer programming services. McCormick served as the company's CEO from 1993 to 2009.
An investigation by the department's Employee Benefits Security Administration found that the funds, withheld from the employees' paychecks between January 2007 and December 2008, were commingled with the general assets of the company and used for company purposes and obligations. These funds were supposed to be used for the exclusive benefit of the plan and its participants. McCormick admitted to owing funds to the plan in a consent judgment filed in his personal bankruptcy case.
"Plan fiduciaries must act solely in the interests of participants who are counting on these funds for retirement. These defendants failed in their obligations to their employees, and the Labor Department is committed to seeing that plan participants are protected," said James Purcell, director of EBSA's Kansas City Regional Office in Missouri, which conducted the investigation.
The department filed the lawsuit in the U.S. District Court for the Middle District of Florida, Jacksonville Division, because McCormick resides in or near St. Augustine, Fla. The department is asking the court to order that the defendants restore to the plan all losses including interest and lost opportunity costs, set off McCormick's own individual plan accounts against the amount of losses and enjoin the defendants from any further violations of ERISA. The department also has asked that the defendants be permanently barred from serving as fiduciaries for any plan that is subject to ERISA, and that an independent fiduciary be appointed at the defendants' expense to oversee the plan and distribute the proceeds to the plan or the participants, as appropriate.
The case is being litigated by the Labor Department's Regional Office of the Solicitor in Atlanta. Employers and workers can contact EBSA at 816-285-1800 or toll-free at 866-444-3272 for help with problems relating to private sector retirement and health plans. For more information, visit http://www.dol.gov/ebsa.
Solis v. Greg A. McCormick
Civil Action File Number 3:12-cv-173-J-20JBT