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EBSA News Release: [03/23/2006]
Office of Public
Affairs
Boston, Mass.
Release Number: 06-0256-NEW
U.S. Labor Department Obtains Judgment Ordering Payment
of
More Than $1.3 Million to Long Island, N.Y., 401(k) Plan
NEW YORK — The U.S. Department of Labor has obtained a
consent judgment ordering payment of over $1.3 million to a 401(k) plan
sponsored by Lawrence Aviation Industries Inc. of Port Jefferson Station, N.Y.
The judgment resolves a lawsuit against the company, a manufacturer of titanium
products for the aerospace industry, and its owner.
"This employer treated their employees' 401(k) plan as their personal
piggy bank," said Secretary of Labor Elaine L. Chao. "I am pleased that the
department was able to obtain a court order on behalf of the employees to
restore the $1.3 million that was taken from their 401(k) plan."
The suit, filed May 2004, against the Long Island company and owner
Gerald Cohen, alleged violations of the federal Employee Retirement Income
Security Act. The suit charged that the defendants made loans to themselves
from plan assets which they never repaid, and that they failed to collect
employee contributions owed to the plan.
The consent judgment was entered in U.S. District Court for the Eastern
District of New York. The judgment permanently bars the defendants from serving
as plan fiduciaries and orders them to repay $1,385,911.07 to the plan. Cohen
also is required to waive his right to receive any benefits from the plan, and
the court will appoint an independent fiduciary to administer the plan, collect
the restitution and terminate the plan, if necessary.
Employers with similar problems, who are not yet the subject of an
investigation by the Labor Department's Employee Benefits Security
Administration (EBSA), may be eligible to participate in the department's
Voluntary Fiduciary Correction Program (VFCP). Participation in the VFCP
requires employers to correct any violations but allows them to avoid EBSA
enforcement actions and civil penalties as well as any applicable excise taxes.
For more information about the VFCP see www.dol.gov/ebsa.
The suit resulted from an investigation by EBSA's New York regional
office. Employers and workers can reach EBSA at 212-607-8600 or through its
toll-free number, 1-866-444-EBSA (3272), for help with problems relating to
private-sector retirement and health plans. In fiscal year 2005, EBSA achieved
record monetary results of $1.7 billion related to pension, 401(k), health and
other benefits for millions of American workers and their families.
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(Chao v. Cohen) Civil Action Number 2:04-CV-1921-ADS-WDW
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