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Rochester, New York - Gary Ragan, trustee of the
Flower City Insulation Savings and Investment Plan, has agreed, should he
ever be able, to restore to the plan a total of $19,282, plus interest, to
settle a U.S. Department of Labor lawsuit. The suit alleged violations of
the Employee Retirement Income Security Act (ERISA). Rochester-based
Flower City Insulation has been defunct since 2002.
In a consent judgment, Ragan claims to be unable to
make restitution at present, but agrees to do so in the future should he
ever come into possession of more than $10,000. The IRS also has a large
settlement with Ragan which takes precedence over the Labor Department
settlement. The consent judgment, filed simultaneously with the
department’s complaint in U.S. District Court for the Western District
of New York, was signed on October 25, 2005, by U.S. District Judge David
G. Larimer.
According to James Benages, Boston regional director of
the Labor Department’s Employee Benefits Security Administration (EBSA),
the department’s complaint alleged that Ragan, as trustee of the Flower
City Insulation Savings and Investment Plan, had breached his fiduciary
duty by failing to make sure that employee contributions were actually
forwarded to the plan from January 1, 2000 through December 31, 2001. The
contributions, withheld from employee paychecks, were instead used by the
company for other purposes.
“It is a clear requirement of the law,” said
Benages, “that plan assets, including all employee paycheck withholding
contributions, must be used and invested only for the benefit of the
plan’s participants and beneficiaries. Any other use is strictly
prohibited by ERISA.”
The consent judgment also permanently prohibits Ragan
from future violations of ERISA and from serving as a fiduciary of any
other ERISA-covered employee benefit plan. Should he ever make
restitution, the final amount will include both pre- and post-judgment
interest.
This matter was investigated by the EBSA regional
office in Boston and the court case was handled by the Labor
Department’s Regional Solicitor’s Office in New York. In fiscal year
2004, EBSA achieved record monetary results of $3.1 billion related to
pension, 401(k), health and other benefits of millions of American workers
and their families. Employers and workers can contact the Boston regional
office at 617.565.9600. Help with problems relating to private-sector
retirement and health plans can also be obtained by calling EBSA’s toll
free number at 1.866.444.EBSA (3272).
(Chao v Flower City Insulation Savings and Investment
Plan and Gary Ragan)
Civil Action Number: 05-CV-6554 |
