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Release Date: April 30, 2008
Release Number: 08-345-ATL (104)
Contact Name: Michael Wald
Phone Number: 404.562.2076

U.S. Department of Labor obtains judgment barring D.C. attorney from advising or serving employee benefit plans

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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