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Compliance June 8, 2011
DoL Gets $10.5M for DirecTECH ESOP Plan Participants
June 8, 2011 (PLANSPONSOR.com) - The U.S. Department of Labor has obtained six consent judgments requiring payment of $10,454,545 in restitution to the DirecTECH Holding Co. Inc. Employee Stock Ownership Plan.
Reported by Rebecca Moore
The Department announced it also obtained $1,045,454 in civil penalties to the federal government.
The DoL sued the trustees and other fiduciaries of the employee stock ownership plans and eligible individual account plans of DirecTECH Holding Co. Inc. and its former subsidiaries for allegedly using plan assets to purchase company stock at inflated prices in violation of the Employee Retirement Income Security Act (ERISA).
The suit said the board of directors and trustees to the plans violated ERISA by causing or allowing the plans to pay inflated prices to purchase company stock over the period of December 31, 2003, through September 8, 2006. During the period, the plans purchased company stock at a total price in excess of $60 million, which had a reported value of approximately $18 million as of December 31, 2007 (see DoL Sues Trustees over Company Stock Purchases).
The DoL also claimed the plans’ fiduciaries used flawed valuations for the stock transactions, failed to select a qualified appraiser for the stock transactions, and provided inaccurate and incomplete information to the appraiser and his firm.
The plan covered 5,799 participants employed by businesses in Kentucky, Michigan and Louisiana.