DOL Recovers $1.3M for Pension Plan

In a consent judgment entered in the U.S. District Court’s Central District in Los Angeles, officers of Los Angeles-based Western Mixers Inc. agreed to restore $802,901 to participants’ accounts within 10 days. During the course of the investigation leading up to the lawsuit, the company repaid to the plan $485,000 of the total funds identified as missing.

The consent judgment fully recovers unpaid contributions and unauthorized withdrawals, plus interest. The agreement follows an investigation by the Los Angeles Regional Office of the Labor Department’s Employee Benefits Security Administration (EBSA). The investigation determined that, over a five-year period, the company and two officers who served as trustees of the plan failed to make approximately $952,511 in mandatory employer contributions for the benefit of participants and beneficiaries. Investigators also found that the same two officers as well as the company’s chief financial officer made $565,000 in unauthorized withdrawals from the plan accounts, comingling those funds in the company’s general accounts and using them for the benefit of the business. In addition to repaying the missing funds with interest, the defendants will be assessed a penalty equal to 20% of the recovered amount.

“This case demonstrates a clear breach of fiduciary duty,” said Phyllis C. Borzi, assistant secretary of labor for employee benefits security. “Employers hold positions of trust that are violated when money intended for retirement benefits is directed to some other use. Individual trustees have a duty to protect a retirement plan and, as in this case, may be personably liable for the funds. The Labor Department is committed to protecting workers’ retirement funds so that they can continue to provide for themselves and their families during retirement.”

The department’s Regional Office of the Solicitor litigated this case. The court has appointed an independent fiduciary to terminate the plan and to collect, marshal, pay out and administer plan assets. Frank L. Rudy and David H. Bolstad, owners of the company, are removed as plan trustees and fiduciaries. Together with Robert J. Fischer, Western Mixers’ chief financial officer, they are permanently enjoined and restrained from violating the Employee Retirement Income Security Act (ERISA) and from serving as fiduciary or service providers to any ERISA-covered plan in the future.

Western Mixers distributes nuts, dried fruits, beans, rice and other produce to retail outlets nationwide, including grocery stores and major warehouse chains.

The case is Solis v. Frank L. Rudy et. al. and Western Mixers Inc. Money Purchase Pension Plan.