Printer Friendly Version
Release Date: August 1, 2008
Release Number: 08-290-DAL
Contact Name: Gloria Della/Richard Manning
Phone Number: 202.693.8664/202.693.4676
Austin, Texas – The U.S. Department of Labor
has sued fiduciaries of the 401(k) plan for employees of the Brown
Schools Inc., based in Austin, for failure to forward employee
contributions to the company’s 401(k) plan and misusing those assets
to pay the operating expenses of the school.
The Brown Schools are a group of psychiatric
hospitals, boarding schools, residential treatment centers and community
education programs for troubled children and teenagers. At the time of
the alleged violations of the Employee Retirement Income Security Act (ERISA),
the schools operated in Texas, California, Florida, Idaho and Vermont.
“The department is committed to protecting the
benefits of America’s workers and retirees,” said Bradford P.
Campbell, assistant secretary of labor for the Employee Benefits
Security Administration (EBSA). “We will not hesitate to act to hold
accountable those who misuse workers’ retirement assets.”
The suit alleges that plan administrator Rodney Young
and corporate officials Robert Naples, president and chief executive
officer, and Bryan Havel, assistant controller and treasurer, failed to
forward employee contributions owed to the 401(k) plan over a
three-month period. The defendants also allegedly failed to segregate
401(k) assets from those of the school, used the assets to benefit a
party related to the plan and failed to properly administer the plan.
The suit seeks a court order requiring the individual
defendants to restore all losses and profits plus any lost opportunity
costs. The department also asks the court to remove Naples and Havel
from their positions with the plan and permanently bar Naples from
future service to any employee benefit plan governed by ERISA. In
addition, the department asks the court to retain Young as plan
administrator until all assets of the plan are distributed to
participants. Preliminarily, plan losses to approximately 150
participants are estimated at $95,000 plus interest.
The company has been in business since 1940. However,
all but one of the schools filed for Chapter 7 bankruptcy in March 2005.
The 401(k) plan currently has no assets and previously covered
approximately 1,500 participants, according to the latest information
available to the Labor Department.
In fiscal year 2007, EBSA achieved monetary results
of $1.5 billion related to the pension, 401(k), health plans and other
benefits for millions of American workers and their families. This case
was investigated by EBSA’s regional office in Dallas. Employers and
workers can reach EBSA at 972.850.4500 or toll-free at 866.444.3272 for
help with problems relating to private sector retirement and health
plans.
Chao v. Naples
Civil Action No. A08CA529LY
U.S. Department of Labor news releases are accessible on the
Department's Newsroom
page. The information in this news release will be made available
in alternate format (large print, Braille, audio tape or
disc) from the COAST office upon request. Please specify which news release when
placing your request at 202.693.7828 or TTY 202.693.7755. The Labor Department is committed to providing America's employers and
employees with easy access to understandable information on how to comply
with its laws and regulations. For more information, please visit the
Department's Compliance
Assistance page.
|