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1. Background. Section 411 of ERISA establishes a bar
against certain persons serving as employee benefit plan
fiduciaries or service providers because they have been
convicted of any of a broad range of specified crimes.
Prohibited positions and activities include consultants and
advisers to plans and any entity whose activities are in whole
or substantial part devoted to providing goods or services to
employee benefit plans.
As amended by the Comprehensive Crime Control Act of 1984,
section 411 of ERISA prohibits such persons from serving plans
for a period of thirteen years after such judgment or the end
of imprisonment resulting from a disqualifying conviction,
whichever is later, unless the sentencing court, under
appropriate circumstances, has reduced the period of
prohibition to not less than three years or has determined
that service in any of the prohibited capacities would not be
contrary to the purposes of ERISA. The prohibition takes
effect upon the date of conviction (the date of entry of
judgment by the trial court) or the end of imprisonment,
whichever is later.(1)
Section 411(a) of ERISA establishes the procedures for
seeking an exemption from the statutory prohibitions. For any
disqualifying crime committed prior to November 1, 1987, an
Application for Exemption must be directed to the United
States Parole Commission. For a disqualifying crime committed
on or after November 1, 1987, the Petition for Exemption must
be directed to the federal sentencing court, or if the
conviction is a state offense, the petition must be directed
to the United States District Court for the district in which
the disqualifying state offense was committed. A Petition for
Reduction of the Length of Disability for disqualifying
judgments of conviction entered after October 12, 1994 may be
made to the state or federal sentencing judge. No such relief
was available prior to October 12, 1994. Pursuant to Section
III, of the DOL/DOJ Memorandum of Understanding (MOU) related
to criminal investigations (See Chapter 52), EBSA is
authorized to conduct investigations and to provide
information at court hearings concerning requests for an
exemption to section 411. It is the normal procedure for the
Solicitor's Office to represent EBSA in such matters. Requests
for reduction of the length of disability should be treated
the same as a request for exemption.
2. Purpose. When EBSA has been requested to conduct an
investigation related to a motion for relief from section 411
(a), the investigation will be for the purpose of providing
information to the court or parole commission, rather than to
prove a violation of ERISA. The investigation should seek
aggravating or mitigating evidence with regard to the
following three factors:
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The character and gravity of the disqualifying offense;
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The nature of the position for which the applicant is
seeking an exemption; and
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The extent to which the applicant has been rehabilitated
to meet the standards of responsibility required.
3. Source of Cases. Cases may be initiated when information
is received pertaining to a request for relief.
4. Case Opening. At the time a request for relief is
received involving section 411(a), a Program 47 case will be
opened. In some instances, opening
a Program 47 case may not be warranted. For example, due to
the minimal passage of time between a guilty plea or
conviction and a request for reduction in the bar, or the
shortness of time between a request and the sentencing date,
the office may not have new information to contribute. In such
instances, opening a case is discretionary with the RD.
In cases where a prohibited person is occupying a
prohibited position, a Program 52, Criminal Investigation,
should be initiated. (Refer to Chapter 52, paragraphs 1 and
3).
5. Investigative Activity. A Program 47 investigation
requires priority handling and close coordination among the
RO, OE (Criminal Coordinator), the Office of the Solicitor and the
Department of Justice. In view of this, when the RO receives
information that a request for remedial relief is being
sought, an e-mail setting forth the relevant information
should be directed to the appropriate PBSD Decentralized
Litigation Counsel with a copy to the appropriate RSOL ERISA
Counsel and OE (Criminal Coordinator). The e-mail should
describe the party seeking relief, the jurisdiction involved,
the nature of the position for which relief is being sought,
the crime which caused the bar, and any other relevant
information. A determination will then be made as to which SOL
office (national or regional) will handle the matter.
6. Investigation. The investigation of an
application before the Parole Commission focuses upon the
verification of information which is required to be included
in the application by regulations found at 28 CFR Part 4 (Figure
1). Investigations initiated as a result of court
filings should focus upon the three factors described in
paragraph 2 above. Because cases are now filed in Federal
District Court, not the Parole Commission, a court is not
bound by the regulations governing procedures before the
Parole Commission. The Court may choose to adopt certain
Parole Commission procedures with respect to its
determination.
Further, investigations of cases filed in Federal District
Court may have to address more than the three areas in which
the Parole Commission was interested. Accordingly, the RO
should read the pleadings, address any issues raised, and
verify any relevant factual assumptions.
7. Preparation of Closed ROI. All ROIs under this program
will be submitted as closed reports modeled after Figure
2.
8. Regional Director's Transmittal. All ROIs will be
transmitted with a cover memorandum from the RD setting forth
the RO's recommendation as to whether DOL should oppose the
motion (Figure 3). The ROI, exhibits, and recommendation memo
should be directed to the appropriate SOL Counsel. A copy of
the recommendation memo and the ROI, without exhibits, should
be directed to OE (Criminal Coordinator). Copies of court
filings by the Department and the plaintiff should also be
provided to OE (Criminal Coordinator).
(Figure 1)
Sec. |
|
4.1 |
Definitions |
4.2 |
Who may apply for Certificate of
Exemption |
4.3 |
Contents of application |
4.4 |
Supporting affidavit; additional
information |
4.5 |
Character endorsements |
4.6 |
Institution of proceedings |
4.7 |
Notice of hearing;
postponements |
4.8 |
Hearing |
4.9 |
Representations |
4.10 |
Waiver of oral hearing |
4.11 |
Appearance; testimony; cross
examination |
4.12 |
Evidence which may be excluded |
4.13 |
Record of decision. Receipt of documents comprising
record; timing and extension |
4.14 |
Administrative law judge's recommended decision;
exceptions thereto; oral argument before Commission |
4.15 |
Certificate of Exemption |
4.16 |
Rejection of application |
4.17 |
Availability of decisions |
Authority: Secs. 504, 606, Stat. 536, 540 (29 U.S.C. 504,
526): and Secs. 411, 507A. 88 Stat. 887, 894, (29 U.S.C. 1111,
1137).
Source: 44 FR 6890, Feb. 2, 1979, unless otherwise noted.
Cross Reference: For Organization Statement, U.S. Parole
Commission, see Subpart V of Part O of this chapter.
§ 4.1 Definitions
As used in this part:
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Labor Act means the Labor-Management Reporting and
Disclosure Act of 1959 (73 Sta. 519).
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Pension act means the Employee Retirement Income
Security Act of 1974 (Pub. L. 94-406)(88 Sta. 829)
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Act means both of the above statutes.
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Commission means the United States Parole Commission.
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Secretary means the Secretary of Labor or his designee.
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For proceeding under the "Labor Act".
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Employer means the labor organization or person engaged
in an industry or activity affecting commerce, or group or
association of employers dealing with any labor organization,
which an applicant under Section 4.2 desires to serve in a
capacity for which he is ineligible under section 504(a) of
the "Labor Act".
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All other terms used in this part shall have the same
meaning as identical or comparable terms when those terms are
used in the "Labor Act".
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For proceedings under the "Pension Act"
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Employer means the employee benefit plan with which an
applicant under § 4.2 desires to serve in a capacity for
which he is ineligible under section 411(a) of the
"Pension Act" (29 U.S.C. section 1111).
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All other terms used in this part shall have the same
meaning as identical or comparable terms when those terms are
used in the "Pension Act".
§ 4.2 Who may apply for Certificate of
Exemption
Any person who has been convicted of any of the crimes
enumerated in section 504(a) of the "Labor Act"
whose service, present or prospective, as described in that
section because of such a conviction or a prison term
resulting therefrom; or any person who has been convicted of
any of the crimes enumerated in section 411(a) of the
"Pension Act" (29 U.S.C. section 1111) whose
service, present or prospective, as described in that section
is or would be prohibited by that section because of such a
conviction or a prison term resulting therefrom, may apply to
the Commission for a Certificate of Exemption from such a
prohibition under the applicable Act.
§ 4.3 Contents of applications
A person applying for a Certificate of Exemption shall file
with the Office of General Counsel, U.S. Parole Commission,
5500 Friendship Boulevard, Chevy Chase, Maryland 20815-7286, a
signed application under oath, in seven copies, which shall
set forth clearly and completely the following information:
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The name and address of the applicant and any other
names used by the applicant and dates of such use.
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A statement of all convictions and imprisonments, which
prohibit the applicant's service under the provisions of the
applicable Act.
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Whether any citizenship rights were revoked as a result
of conviction or imprisonment and if so the name of the court
and date of judgment thereof and the extent to which such
rights have been restored.
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The name and location of the employer and a description
of the office or paid position, including the duties thereof,
for which a Certificate of Exemption is ought.
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A full explanation of the reasons or grounds relied
upon to establish that the applicant's service in the office
or employment for which a Certificate of Exemption is sought
would not be contrary to the purposes of the applicable Act.
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A statement that the applicant does not, for the
purpose of the proceeding, contest the validity of any
conviction.
(28 U.S.C. 509 and 510, 5 U.S.C. 301)
(44 FR 6890, Feb. 2, 1979, as amended at 46 FR 52354, Oct.
27, 1981)
§ 4.4 Supporting affidavit; additional
information
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Each application filed with the Commission must be
accompanied by a signed affidavit, in 7 copies, setting forth
the following concerning the personal history of the
applicant:
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Place and date of birth. If the applicant was not born
in the United States, the time of first entry and port of
entry, whether he/she is a citizen of the United States, and
if naturalized, when, where and how he/she became naturalized
and the number of his Certificate of Naturalization.
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Extent of education, including names of schools
attended.
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History of marital and family status, including a
statement as to whether any relatives by blood or marriage are
currently serving in any capacity with an employee benefit
plan, or labor organization, group or association of employers
dealing with labor organizations or industrial labor relations
group, or currently advising or representing any employer with
respect to employee organizing concerted activities or
collective bargaining activities.
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Present employment, including office or offices held
with a description of the duties thereof.
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History of employment, including military service, in
chronological order.
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Licenses held at the present or at any time in the past
five years, to posses or carry firearms.
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Veterans' Administration claims number and regional
office handling claim, if any.
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A listing (not including traffic offenses for which a
fine of not more than $25 was forfeited) by date and place of
all arrests, convictions for felonies, misdemeanors, or
offenses and all imprisonment or jail terms resulting
therefrom, together with a statement of the circumstances of
each violation which led to arrest of conviction.
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Whether applicant was ever on probation or parole, and
if so the names of the courts by which convicted and the dates
of conviction.
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Names and location of all employee benefit plans,
labor organizations or employer groups with which the
applicant has ever been associated or employed, and all
employers or employee benefit plans which he has advised or
represented concerning employee organizing, concerted
activities, or collective bargaining activities together with
a description of the duties performed in each such employment
or association.
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A statement of applicant's net worth, including all
assets held by him or in the names of others for him, the
amount of each liability owed by him or by him together with
any other person and the amount and source of all income
during the immediately proceeding five calendar years plus
income to date of application.
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Any other information that the applicant feels will
assist the Commission in making its determination.
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The Commission may require of the applicant such
additional information as it deems appropriate for the proper
consideration and disposition of his application.
§ 4.5 Character endorsements
Each application filed with the Commission must be
accompanied by letters or other forms of statement (in three
copies) from six persons addressed to the Chairman, U.S.
Parole Commission, attesting to the character and reputation
of the applicant. The statement as to character shall indicate
the length of time the writer has known applicant, and shall
describe applicant's character traits as they relate to the
position for which the exemption is sought and the duties and
responsibilities thereof. The statement as to reputation shall
attest to applicant's reputation in his community or in his
circle of business or social acquaintances. Each letter or
other form of statement shall indicate that it has been
submitted in compliance with procedures under the respective
Act and that applicant has informed the writer of the factual
basis of his application. The persons submitting letters or
other forms of statement shall not include relatives by blood
or marriage, prospective employers, or persons serving an any
official capacity with an employee benefit plan, labor
organization, group or association of employers dealing with
labor organizations or industrial labor relations groups.
§ 4.6 Institution of proceedings
All applications and supporting documents received by the
Commission shall be reviewed for completeness by the Office of
General Counsel of the Parole Commission and if complete and
fully in compliance with the regulations of this part the
Office of General Counsel shall accept then for filing.
Applicant and/or his representative will be notified by the
Office of General Counsel of any deficiency in the application
and supporting documents. The amount of time allowed for
deficiencies to be remedied will be specified in said notice.
In the event such deficiencies are not remedied within the
specified period or any extension thereof, granted after
application to the Commission in writing within the specified
period, the application shall be deemed to have been withdrawn
and notice thereof shall be given to applicant.
§ 4.7 Notice of hearing postponements
Upon the filing of an application, the Commission shall:
(a) Set the application for a hearing on a date within a
reasonable time after its filing and notify the applicant of
such date by certified mail; (b) Give notice, as required by
the respective Act, to the appropriate State, County or
Federal prosecuting officials in the jurisdiction or
jurisdiction in which the applicant was convicted that an
application for a Certificate of Exemption has been filed and
the date for hearing thereon; and (c) Notify the Secretary
that an application has been filed and the date for hearing
thereon and furnish him copies of the application and all
supporting documents. Any party may request a postponement of
a hearing date in writing from the Office of General Counsel
at any time prior to ten (10) days before the scheduled
hearing. No request for postponement other than the first for
any party will be considered unless a showing is made of cause
entirely beyond the control of the requester. The granting of
such requests will be within the discretion of the Commission.
In the event of a failure to appear on the hearing date as
originally scheduled or extended, the absent party will be
deemed to have waived his right to a hearing. The hearing will
be conducted with the parties present participating and
documentation, if any, of the absent party entered into the
record.
§ 4.8 Hearing
The hearing on the application shall be held at the offices
of the Commission in Washington, D.C., or elsewhere as the
Commission may direct. The hearing shall be held before the
Commission, before one or more Commissioners, or before one or
more administrative law judges appointed as provided by
section 11 of the Administrative Procedure Act (5 U.S.C. 3105)
as the Commission by order shall determine. Hearings shall be
conducted in accordance with sections 7 and 8 of the
Administrative Procedure Act (5 U.S.C. 556, 557).
§ 4.9 Representation
The applicant may be represented before the Commission by
any person who is a member in good standing of the bar of the
Supreme Court of the United States or of the highest court of
any State or territory of the United States or the District of
Columbia and who is not under any order of any court
suspending, enjoining, restraining or disbarring him from, or
otherwise restricting him in, the practice of law. Whenever a
person acting in a representative capacity appears in person
or signs a paper in practice before the Commission, his
personal appearance or signature shall constitute a
representation to the Commission that under the provisions of
this part and applicable law he is authorized and qualified to
represent the particular person in whose behalf he acts.
Further proof of a person's authority to act in a
representative capacity may be required. When any applicant is
represented by an attorney at law, any notice or other written
communication required or permitted to be given to or by such
applicant shall be given to or by such attorney. If an
applicant is represented by more than one attorney, service by
or upon any one of such attorneys shall be sufficient.
§ 4.10 Waiver of oral hearing
The Commission upon receipt of a statement from the
Secretary that he does not object, and in the absence of any
request for oral hearing from the others to whom notice has
been sent pursuant to §4.7 may grant an application without
receiving oral testimony with respect to it.
§ 4.11 Appearance; testimony;
cross-examination
(a) The applicant shall appear and except as otherwise
provided in §4.10. shall testify at the hearing and may
cross-examine witnesses.
(b) The Secretary and other to whom notice has been sent
pursuant to §4.7 shall be afforded an opportunity to appear
and present evidence and cross-examine witnesses, at any
hearing.
(c) At the discretion of the Commission or presiding
officer, other witnesses may testify at the hearing.
§ 4.12 Evidence which may be excluded
The Commission or officer presiding at the hearing may
exclude irrelevant, untimely, immaterial or unduly repetitious
evidence.
§ 4.13 Record for decision, receipt of documents
comprising record; timing and extension
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The application and all supporting documents, the
transcript of the testimony and oral argument at the hearing,
together with any exhibits received and other documents filed
pursuant to these procedures and/or the Administrative
Procedures Act shall be made parts of the record for decision.
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At the conclusion of the hearing the presiding officer
shall specify the time for submission of proposed findings of
fact and conclusions of law (unless waived by the parties),
transcript of the hearing and supplemental exhibits, if any.
He shall set a tentative date for the recommended decision
based upon the timing of these preliminary steps. Extensions
of time may be requested by any party, in writing from the
Parole Commission. Failure of any party to comply with the
time frame as established or extended will be deemed to be a
waiver on his part of his right to submit the document in
question. The adjudication will proceed and the absence of
said document and reasons thereof will be noted in the record.
§ 4.14 Administrative law judge's recommended decision;
exceptions thereto; oral argument before Commission
Whenever the hearing is conducted by an administrative law
judge, at the conclusion of the hearing he shall submit a
recommended decision to the Commission, which shall include a
statement of findings and conclusions as well as the reasons
therefore. The applicant, the Secretary and others to whom
notice has been sent pursuant to §4.7 may file with the
Commission, within 10 days after having been furnished a copy
of the recommended decision, exceptions thereto and reasons in
support thereof. The Commission may order the taking of
additional evidence and may request the applicant and others
to appear before it. The Commission may invite oral argument
before it on such questions as it desires.
§ 4.15 Certificate of Exemption
The applicant, the Secretary and others to whom notice has
been sent pursuant to §4.7 shall be served a copy of the
Commission's decision and order with respect to each
application. Whenever the Commission’s decision is that the
application be granted, the Commission shall issue a
Certificate of Exemption to the applicant. The Certificate of
Exemption shall extend only to the stated employment with the
prospective employer named in the application.
§ 4.16 Rejection of application
No application for a Certificate of Exemption shall be
accepted from any person whose application for a Certificate
of Exemption has been withdrawn, deemed withdrawn due to
failure to remedy deficiencies in a timely manner, or denied
by the Commission within the preceding 12 months.
§ 4.17 Availability of decisions
The Commission's Decisions under both Acts are available
for examination in the Office of the U.S. Parole Commission,
5550 Friendship Boulevard, Chevy Chase, Maryland 20815-7286.
Copies will be mailed upon written request to the Office of
General Counsel, U.S. Parole Commission, at the above address
at a cost of ten cents per page.
(28 U.S.C. 509 and 510, 5 U.S.C. 301);(44 FR 6890, Feb. 2,
1979, as amended at 46 FR 52354, Oct. 27, 1981)
(Figure 2)
Report of
Investigation
Sample Format |
U.S.
Department of Labor
Employee Benefits Security Administration |
|
|
This document is the
property of the Employee Benefits Security
Administration.
Its contents are not to be disclosed to unauthorized
persons. |
File No. |
Subject: (Name and
Address of Applicant) |
Date |
Name and Address of
Plan |
By Investigator/Auditor |
|
Approved by |
EIN/PIN |
Status |
-
Predication
State the reason for the case opening and for conducting an
investigation.
-
Issues and Findings
Cite the facts, which show:
-
Nature of Employment Sought by
Applicant.
Include a description of the position, including the duties
for which the Certificate of Exemption is sought.
Establish the validity or lack of validity of the reasons
or grounds relied on to show the applicant's employment (for
which the Certificate of Exemption is sought) would not be
contrary to the purpose of ERISA. Include a statement
concerning what access, if any, the applicant will have to
plan funds and the degree of authority and discretion he/she
will have in the position.
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Arrests, Convictions and
Rehabilitation.
Verify applicant's statements in his/her supporting
affidavit as to his/her history of arrests and convictions,
which prohibit applicant's service to an employee benefit plan
under Section 411 of ERISA.
Under this heading, report views of the prosecuting
officials, arresting officers, and judges, regarding the
application for a Certificate of Exemption and include as
exhibits. Include details of any mitigating or aggravating
circumstances which might have been involved with regard to
the factors listed in paragraph 2 of this Chapter.
-
Disqualifying Offense.
Describe the offense for which the subject was convicted
and consequently barred from employment in employee benefit
plans under section 411 of ERISA.
Discuss the subject's involvement in the offense. Include
the extent of the subject's participation. Establish
information such as whether the subject was an accessory or
the principal perpetrator.
-
Nature of the Employment Offered.
Describe the position for which the applicant is seeking an
exemption. Be specific about the duties and authority for
which the subject will be responsible as they relate to
employee benefit plans.
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Personal Information.
Under this heading, report the results of the investigation
into the accuracy of the sworn statements made by the
applicant in his/her supporting affidavit and not previously
mentioned in the report. This should include but not be
limited to: birth date, extent of education, marriage and
family status, present employment, past employment, military
service, licenses issued, criminal record and probation or
parole (if not previously reported in Part B above), labor
organizations (with which applicant has been associated or
employed), and financial background including net worth.
-
Neighborhood Investigation.
Include statements of neighbors, landlord and
superintendent (where applicable) as to applicant's status in
the neighborhood and to verify applicant's residence.
-
Credit Check.
Include reports of local credit bureaus and results of
investigations at county clerk's offices regarding judgments
against the applicant.
-
Character References.
Include as exhibits interviews conducted with individuals
who supported the applicant's application for exemption.
Exhibits
All significant facts presented in the report should be
supported with exhibit citations. The following procedure
should be used in submitting exhibits:
-
State the name of the individual who is the subject of
an RI or signed statement and the date of the interview.
-
Documents, schedules, etc., should be precisely
identified.
-
Each supporting document should be a separate exhibit.
-
Multiple page exhibits should be numbered.
-
Exhibits should be identified by number.
-
All copies must be legible.
-
All plan documents (trust agreements, etc.) must be
included as exhibits.
List of Documents and Workpapers Available
in RO but Not Used as Exhibits
List documents, schedules, RIs, etc., in the RO file that
were not included as exhibits. Identify each document by the
date(s) covered.
(Figure 3)
U.S. Department of Labor
Employee Benefits Security Administration
Memorandum For: |
Criminal Coordinator, OE |
From: |
Regional Director
XYZ Regional Office |
Subject: |
Name, Address of Applicant
Name, Address and EIN of Plan |
First paragraph - briefly state the basis for
opening the case.
Second paragraph - briefly state the nature of the
original conviction and any mitigating circumstances involved
in sentencing.
Third paragraph - briefly state investigative
results, specifically commenting on the applicant's efforts at
rehabilitation.
Fourth paragraph - briefly state the recommendation
of the Regional Office as to whether the Department of Labor
should contest the application.
cc: File
-
For disqualifying
convictions on or before October 12, 1984, the period of
disability was five years following judgment of
conviction, the final sustaining of the judgment on
appeal, or the end of imprisonment, whichever is later.
|