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Release Date: June 21, 2006
Release Number: 06-1043-SAN (SF-65)
Contact Name: Roger Gayman
Phone Number: 415.975.4742
San Francisco, California - The U.S.
Department of Labor (DOL) has reached an agreement with three executives
of now-defunct Irvine, California-based Esynch Corporation providing for
them to pay more than $23,500 owed to11 former employees and a civil
monetary penalty to the federal government of more than $4,700. The
agreement resolves a lawsuit alleging the company failed to forward
employee contributions to its 401(k) retirement savings plan.
“The department is committed to protecting the
benefits of America’s workers and retirees,” said Billy Beaver,
regional director of DOL’s Employee Benefits Security Administration (EBSA)
in Los Angeles, which investigated the case. “We continue to
vigorously enforce the Employment Retirement Security Act (ERISA), which
requires that employee contributions be forwarded to 401(k) plans in a
timely manner.”
Thomas Hemingway of Anaheim Hills, Richard Hutt of
Orange, and Robert Way of Irvine violated ERISA by failing to ensure
that employee contributions withheld from participants’ paychecks were
transferred to the 401(k) plan. The defendants have agreed to pay an
independent fiduciary to distribute the funds to the former Esynch
employees. The defendants and their spouses have forfeited interests
they held in the 401(k) plan.
The agreement also permanently bars Hutt from future
service as a fiduciary of any ERISA-covered employee benefit plan. Way
has been barred from such a position for 10 years. Esynch developed and
marketed media rights and management solutions. It currently conducts
business as Mergence, Inc.
The department’s suit resulted from an
investigation conducted by EBSA’s Los Angeles regional office which
discovered that between January 2000 and February 2002, the defendants
failed to transfer money deducted from employee paychecks to the Esynch
Corporation 401(k) Retirement Savings Plan. The company had used the
funds to cover general business expenses. When the company persisted in
not repaying the funds, the department filed a lawsuit in February with
the U.S. District Court for the Central District of California.
In fiscal year 2005, EBSA achieved monetary results
of $1.7 billion related to pension, 401(k), health and other benefits
for millions of American workers and their families. Employers and
workers with questions or concerns regarding their private-sector
pension and health plans can contact the EBSA regional office in Los
Angeles at 626.229.1000 or EBSA’s toll free number, 1.866.444.EBSA
(3272). Information is also available from the agency’s Web site at
www.dol.gov/ebsa.
(Chao v. Esynch Corporation 401(k) Retirement Plan)
Civil Action No. CV 06-1180-DSF(Ex), United States District Court for
the Central District of California.
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