Coeur D'Alene, Idaho - James C. Stone, former
president, director and part owner of failed Alpha Health Services Inc. of
Post Falls, Idaho, has agreed in a consent judgment obtained by the U.S.
Department of Labor in U.S. Bankruptcy Court not to discharge debts owed
to the company’s employee stock ownership plan.
Stone’s debt of $66,838 consists of plan assets he
allegedly used in a failed personal investment scheme, plus losses to the
plan resulting from prohibited real estate transactions. According to the
judgment, Stone agrees to forfeit his individual account balance with the
plan and to pay a penalty of 20 percent of the final amount paid to the
plan. He is also permanently barred from serving in a fiduciary capacity
to any employee benefit plan covered by the Employee Retirement Income
Security Act.
“This sends a strong message to those responsible for
employee benefit plans that they cannot use their employees’ funds for
their own personal benefit nor have their personal debts forgiven at the
expense of their employees,” said Francis Clisham, regional director of
the department's Employee Benefits Security Administration (EBSA) in San
Francisco.
Stone filed for personal bankruptcy December 3, 2004,
after which the Labor Department filed an adversary complaint in U.S.
Bankruptcy Court in Coeur d’Alene to prevent Stone from discharging in
bankruptcy proceedings debts owed to the plan. The department alleged that
Stone used plan assets to fund his personal investment in an overseas
money scam. Stone was also charged with causing the plan to purchase a
house and land from Alpha Health Services; reimburse himself for multiple
improvements to the property; and purchase the property from the plan
after he had lived there for almost a year rent-free, while the plan paid
utilities.
According to the new trustee, the plan has not yet been
terminated. The major assets of Alpha Health Services have been sold to
Seven Oaks Community Homes Inc. of Boise. Alpha Health Services filed for
bankruptcy in February 2004. There were approximately 149 employees
participating in the plan when the company went out of business.
Employers and workers can reach EBSA’s Seattle
District Office, which investigated the case, at 206.553.4244 or through
its toll-free number, 1.866.444.EBSA(3272), for help with problems
relating to private-sector retirement and health plans.
(Chao v. Stone)
Case No. 2-04-BK-21776-TLM (U.S. Bankruptcy Court) |