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Release Date: 04/17/2002
Release Number: BOS 2002-078
Contact Name: John Chavez
Phone Number: 617.565.2075
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Boston, Massachusetts - Claywell Electric Company, Inc., of Simsbury,
Connecticut, and company
president Kurt Claywell have agreed that 31 former employees who participated in
the company’s profit sharing plan will receive over $88,000 in pension
benefits from the plan, as the result of a lawsuit filed by the U.S. Department
of Labor alleging violations of the Employee Retirement Income Security Act (ERISA).
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The agreement is part of an April 12, 2002, consent judgment signed by U.S.
District Judge Dominic J. Squatrito that resolves the lawsuit the department
filed earlier this month in the U.S. District Court for Connecticut.
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According to James Benages, Boston regional director for the department’s
Pension and Welfare Benefits Administration, the lawsuit alleged that in 1996
the defendants terminated from employment all but four of the employees of the
company who were participants in the profit sharing plan, and discontinued
contributions to the plan. At that point, under the Internal Revenue Code,
participants in the plan should have been treated as fully vested in the plan.
Instead they were treated as having forfeited the non-vested portions of their
accounts.
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The complaint alleges Claywell failed to make distributions to the terminated
participants of the full amounts credited to their accounts. As a
result Claywell, his wife, father and mother, who were the only remaining
participants in the plan, improperly benefited. ERISA requires
administrators of employee benefit plans to discharge their fiduciary duties to
the plan solely in the interest of the participants and beneficiaries. The
suit alleged Claywell breached this fiduciary duty and dealt with plan assets in
his own interest or for his own account.
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The consent judgment requires Claywell Electric Co., as administrator of the
plan, to direct the current trustee of the plan to make distributions totaling
$88,057.21 to certain participants who terminated employment with Claywell
Electric from 1993 to 1996. The defendants agree not to participate in
future violations of ERISA, and acknowledge that Claywell cannot act as a
fiduciary with respect to any employee benefit plan covered by ERISA until May
2013.
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The department’s legal action followed an investigation by the Boston
regional office of the Pension and Welfare Benefits Administration, located in
Room 575 of the John F. Kennedy Federal Building in Boston. The telephone number
is 617.565.9600. Long distance callers may reach the office through
PWBA’s Toll-Free Employee & Employer Hotline number: 1.866.275.7922.
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(Chao v. Kurt Claywell, Claywell Electric
Company, Inc. and Claywell Electric Company, Inc. Profit
Sharing Plan
Civil Action No. 302-CV-589DJS)
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U.S.
Department of Labor news releases are accessible on the Internet. The information in this news release will be made
available in alternate format upon request (large print, Braille, audio
tape or disc) from the Central Office for Assistive Services and
Technology. Please specify which news release
when placing your request. Call 202.693.7773 or TTY 202.693.7775.
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