DOL Obtains Government Contract Retirement Plan Contributions

The Department of Labor (DOL) has secured a consent judgment to restore of $95,000 to the 401(k) plan sponsored by Brunk Industries Inc. in Oakdale, California.

Based on an investigation by the DOL’s Employee Benefits Security Administration (EBSA), the DOL filed a complaint alleging that James Brunk and Brunk Industries Inc. failed to collect prevailing wage employer contributions for the employees’ 401(k) plan. These contributions were provided by government contracts for work performed by defendant’s employees under prevailing wage laws.

Instead, the defendants retained and comingled the contributions with company assets and used the funds for non-Plan purposes, in violation of the Employees Retirement Income Security Act (ERISA).

The U.S. District Court for the Eastern District of California approved a consent judgment and order requiring the defendants to restore $95,109 to the 401(k) plan. In addition, the judgment removes Brunk as the plan’s fiduciary and appoints Lefoldt & Company as the independent fiduciary responsible for winding up the plan, including the distribution of its assets to participants. Brunk will pay $4,890 of the costs for this independent fiduciary, and also may be assessed a 20% civil penalty on the amount restored to the plan. The court order also permanently enjoins Brunk from serving as a fiduciary of, or service provider to, any ERISA-covered employee benefit plan in future.

The court’s order can be viewed here.