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Compliance August 14, 2009
DoL Sues Plan Trustees for Misuse of Plans' Assets
August 14, 2009 (PLANSPONSOR.com) - The U.S.
Department of Labor has sued defunct Vinyl-Mark Products Inc.
of Hueytown, Alabama, and the company's pension and
profit sharing plan trustees for allegedly misusing plan
assets to pay the operating expenses of the
company.
Reported by Rebecca Moore
A DoL press release says the lawsuit alleges that the company, formerly known as First Alabama Supply Co. Inc., and trustees Willard D. Bailey Jr. and Jessie Mae Bailey violated the Employee Retirement Income Security Act (ERISA) by allegedly making a series of transfers totaling $898,259.69 from the plans to the operating accounts of the company at various times between October 2004 and February 2007.
The suit seeks a court order to require that all defendants restore all losses incurred by the plans and disgorge any profits or illegal gains, and that the trustees’ retirement accounts be offset to repay losses and lost opportunity costs owed to the plans. Money offset will be re-distributed to the accounts of the remaining participants covered by the plans, according to the announcement.
The DoL also asks that the court appoint an independent fiduciary to oversee the plans, and that the trustees be permanently barred from serving in a fiduciary capacity to any plan governed by ERISA.
The company was a wholesale distributor of vinyl siding, accessories and windows, and sponsored a defined benefit plan for 59 participants and a profit sharing plan covering 29 participants. As of December 31, 2005, the plans held cumulative assets of $701,361.