PBGC Sues to Recover Losses Caused by Trustee’s Asset Transfer

The Pension Benefit Guaranty Corporation filed a complaint on May 17 against the CEO of Omni Vision International Inc., Jung Kee Kim caused the terminated defined benefit plan to transfer plan assets to a business checking account, causing the plan to suffer $311,699.51 in losses.

The PBGC, which took over as trustee of the cash balance plan in 2023, sued Kim to recover plan assets the corporation alleges he misappropriated as a plan trustee.

Kim authorized a wire transfer of $141,767.20 from the plan’s Merrill Lynch trust account that was deposited into Omni Vision’s business checking account at Bank of America on February 27, 2018. Kim repeated wiring assets out of the plan multiple times in 2018 in different amounts, the complaint alleged. As a result of Kim’s violations, the plan lost at least $311,699.51 plus interest, according to the PBGC’s complaint.

Kim, who is also one of the plan’s four participants, breached his fiduciary duties under the Employee Retirement Income Security Act, causing the plan to engage in transfers not in the sole interest of plan participants and beneficiaries and not a prudent use of the plan’s assets, the PBGC wrote.

“Kim violated his fiduciary duty [under ERISA] to discharge his duties solely in the interest of participants and beneficiaries each time he caused the plan to transfer assets from the plan to Omni Vision for purposes other than exclusively providing benefits to plan participants and beneficiaries or paying reasonable plan expenses.”

In the complaint, the PBGC requests the court order Kim to restore all the plan’s losses as well as pre-judgment and post-judgment interest; restore to the plan any profits Kim enjoyed through use of assets of the plan, if any; and allow PBGC to offset benefits Kim is entitled to receive under the plan against the amount the court orders Kim to restore to the plan.

Omni Vision has ceased operations. Records show Omni Vision’s corporate bank accounts were liquidated in 2019, and neither corporate personnel nor an active business address can be located, PBGC wrote in the complaint.

When PBGC terminated the plan, benefits payable to participants and beneficiaries exceeded the amount of the plan’s assets by $483,464. The PBGC is authorized to commence proceedings to terminate a plan whenever the PBGC determines the plan will be unable to pay benefits when due and to make benefit payments to the participants and beneficiaries up to the regulatory limits.  

In 2017, the plan held $421,534 in retirement assets for four participants, according to the most recent regulatory filing to the Department of Labor, for the 2016 plan year.

The PBGC took over as the plan’s legal trustee, December 28, 2023.

Omni Vision established the plan to provide pension benefits to certain of the company’s employees, in 2007.

The lawsuit, in the U.S. District Court for the Central District of California, is Pension Benefit Guaranty Corporation, as statutory trustee of the Omni Vision International Inc Cash Balance Pan v. Jung Kee Kim (aka Nicholas Kim).

Representatives of the PBGC responded to a request for comment by email, noting the agency does not comment on ongoing litigation. Omni Vision representatives did not respond to a request for comment on the lawsuit.