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Release Date: 05/15/2002
Release Number: BOS 2002-107
Contact Name: Ted Fitzgerald
Phone Number: 617.565.2074
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Boston, Massachusetts - Central Scale Company of Warwick,
Rhode Island, has agreed to
repay $600,000 to the Central Scale Profit Sharing Plan to settle a lawsuit
filed against the company, its president and vice president by the U.S.
Department of Labor in October 2000. The suit alleged violations of the
Employee Retirement Income Security Act (ERISA).
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The agreement is part of a May 3, consent judgment that resolves
the lawsuit. The company agreed to the judgment, as have company president
Robert Geisser and vice president Matthew Geisser, both of whom served as
trustees of the profit sharing plan, which was set up for company employees in
1979.
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The suit charged Robert and Matthew Geisser, who are brothers,
with making an improper $80,000 loan from the plan to a relative and failing to
collect any interest or principal on the loan. The suit alleged the
Geissers also made unexplained withdrawals; caused the plan to hold a similarly
unsecured and uncollected $111,931 loan made to friends of Matthew Geisser; and
caused the plan to buy and sell high risk stocks, which were traded among the
plan, the company and Matthew Geisser.
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ERISA requires plan officials to administer plans solely in the
interest of the participants and beneficiaries for the exclusive purpose of
providing benefits to them, according to James Benages, Boston regional director
for the Labor Department’s Pension and Welfare Benefits Administration.
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The consent judgment orders the company to repay $600,000, plus
interest, to the plan, in installment payments ending in February 2007. The
Geissers have secured a promissory note for $540,000 with mortgages on their
properties, and have agreed to offset their account balances in the plan for the
benefit of the other participants and beneficiaries. The company paid the
$60,000 difference between the promissory note and the judgment amount on May
10.
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In addition, the judgment requires the defendants to seek
repayment of the larger of the illegal loans and to restore the $140,000 total
involved in that loan by February 28, 2007. The Geissers have already repaid
the loan made to their relative, plus interest and are enjoined for ten years
from serving as fiduciaries to any plan covered by ERISA. They also are
ordered to cooperate fully with the independent trustee who now controls the
plan’s assets.
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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:
1.866.275.7922.
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(Chao v. Central Scale Company, et al)
Civil Action No. 00-525-T
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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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