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Release Date: April 30, 2008
Release Number: 08-345-ATL (104)
Contact Name: Michael Wald
Phone Number: 404.562.2076
Atlanta – The U.S. Department of Labor has
obtained a judgment permanently barring a District of Columbia lawyer
from providing advice or services to any benefit plan covered by the
Employee Retirement Income Security Act (ERISA).
“We are pleased that this defendant will no longer
be allowed to advise employee benefit clients,” said Bradford P.
Campbell, assistant secretary of the Labor Department’s Employee
Benefits Security Administration (EBSA).
The judgment, filed in the U.S. District Court for
the Eastern District of Tennessee, resolves a department lawsuit
involving two pension plans of bankrupt SCT Yarns Inc., headquartered in
Chattanooga, Tennessee. The suit alleged that defendant David Johnston
knowingly participated in the improper transfer of plan assets to
companies affiliated with the president of SCT Yarns, Kenneth H. Combs
Jr. Johnston also allegedly received fees from assets of the plans
following the improper transfers.
Under terms of the judgment, Johnston is barred from
receiving any compensation and serving in a fiduciary capacity to any
ERISA-covered plans in the future.
SCT Yarns sponsored two retirement plans covering 771
participants, according to the latest data available to the Labor
Department. The Pension Benefit Guaranty Corp. (PBGC) took over the
retirement plans for hourly and salaried employees in 2001 and will pay
benefits to retirees.
The civil investigation was conducted by the Atlanta
Regional Office of EBSA. Employers and workers can reach EBSA’s
Atlanta office at 404.302.3900 or toll-free at 866.444.3272 for help
with problems relating to private sector retirement and health plans.
In fiscal year 2007, EBSA achieved monetary results
of $1.5 billion related to pension, 401(k), health and other benefits
for millions of American workers and their families.
Chao v. David Johnston and PBGC v. David Johnston
Civil Action File Number 1:06-CV-226
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