DOL Cracking Down on Unremitted Contributions

This month, the DOL obtained a consent judgment to restore unremitted employee contributions to the Loudonville, Ohio-based Sunset Golf. In January, the agency filed a lawsuit against the fiduciary of a Weymouth, Massachusetts-based profit-sharing plan to recover unremitted employee contributions.

In the Sunset Golf case, Perez v. Deighan et al. (docket number 1:13-cv-02398-JG), the U.S. District Court for the Northern District of Ohio granted the DOL a consent order and judgment against the defendants: Daniel Deighan; Timothy Deighan; Sunset Golf LLC; Revolution Golf LLC; Sunset Golf, LLC 401(k) Employee Retirement Plan; and Sunset Golf LLC Group Health Plan in Loudonville, Ohio.

According to the court, Daniel Deighan and Timothy Deighan made restitution to participants of the health plan after the initiation of the litigation in the amount of $8,934.27, representing $8,271.51 in unremitted insurance premiums and $662.76 in lost opportunity costs.

The order notes that Daniel Deighan paid $22,566.21 to an escrow account in the name of the retirement plan, and requires Sunset Golf LLC and Daniel Deighan to pay the remaining balance of $13,714.24 to the retirement plan within five days of the entry of the consent order and judgment. The full $36,280.45 balance to be paid to the retirement plan represents $26,277.28 in unremitted employee contributions and loan repayments and $10,003.17 in lost opportunity costs.

Upon entry of the order, Timothy Deighan will also be permanently enjoined from serving or acting as a fiduciary or service provider to an employee benefit plan subject to the Employee Retirement Income Security Act (ERISA). Daniel Deighan will also be permanently enjoined from serving or acting as a fiduciary or service provider to an employee benefit plan subject to ERISA after paying the remaining balance to the retirement plan, allocating the employee contributions and lost opportunity costs to participants, distributing the plan’s assets, and terminating the plan.

The DOL lawsuit alleged that from October 2007 to March 2011, Daniel Deighan and Sunset Golf LLC failed to remit $26,277.28 in participant contributions and participant loan repayments that were withheld from employees’ paychecks to the retirement plan.

In addition, the suit alleged from December 2010 to January 2011, and from March 2011 to June 2011, Daniel Deighan, Timothy Deighan, and Sunset Golf LLC failed to remit $8,271.51 in insurance premiums withheld from employees’ paychecks to the health plan or the health insurance carrier.

In the Weymouth case, Perez v. Brewer (docket number: 1:14-cv-10227-FDS), the DOL asked the U.S. District Court for the District of Massachusetts to require Thomas R. Brewer, the fiduciary of the Matthewson Corp. Inc. 401(k) Profit-Sharing Plan, to restore plan losses (plus interest) suffered as a result of his fiduciary breaches.

The suit also asks the court to compel Brewer to undo prohibited transactions in which he engaged, as well as prohibiting future violations of ERISA by Brewer and permanently prohibiting Brewer from serving as a fiduciary to any ERISA-covered plan.

According to the DOL lawsuit, the profit-sharing plan was established in January 1984 to provide retirement benefits for employees of the Matthewson Corp. Inc. and their beneficiaries. The company is the plan sponsor and administrator, and Brewer, the company’s owner, president and director, is the plan’s trustee.

The plan is partially funded by contributions withheld from participants’ paychecks that are forwarded to and become assets of the plan. An investigation by the DOL’s Employee Benefits Security Administration found from January 2008 to the present, the company failed to remit to the plan withheld employee contributions, totaling $17,071.53 plus interest, and Brewer failed to take steps to ensure that the contributions were forwarded.