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Compliance June 20, 2006
Company Fined for ESOP Wrongdoing
June 20, 2006 (PLANSPONSOR.com) - A court judgment
ordered a former Tennessee home-health company to pay
$325,000 as part of the settlement of a federal lawsuit
charging it and two of its executives with improperly running
an employee stock ownership plan (ESOP).
Reported by Fred Schneyer
A news release from the US Department of Labor (DoL) announced a court judgment that mandated Elk Valley Professional Affiliates, Inc. (EVPA) of Fayetteville, Tennessee, to restore $295,455 to the company’s retirement plan.
The court also required Mark Waters and David Groce, executives of the former company, to pay a $29,545 fine for violating federal employee benefits law.
Waters is now permanently barred from involvement with any Employee Benefits Retirement Income Security Act (ERISA)-regulated plan, and Groce is barred for seven years, according to the news release.
In April 2003, the DoL sued the company, Groce and Waters, alleging that they had used plan assets to purchase EVPA stock between November 1995 and May 1996 for more than fair market value and that they had improperly secured an ESOP loan with a certificate of deposit owned by the plan and then used the certificate to pay off the loan. Groce and Waters served on the administrative committee of the company’s ESOP.
Waters and Groce also used plan assets to pay closing expenses to Telesis, a broker Waters hired to find a buyer for the company, and then failed to maintain a fidelity bond to protect the plan against losses as required by law, according to DoL charges.
EVPA, which was purchased by Deaconess HomeCare, Inc. in December 1996, operated home health care agencies and home medical equipment facilities inTennessee , northernAlabama andMississippi .