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Release Date: November 2, 2006
Release Number: 06-1919-ATL (263)
Contact Name: Gloria Della/Peter Hong
Phone Number: 202.693.8664/202.693.4676
Atlanta - The U.S. Department of Labor has
sued a District of Columbia lawyer for his participation in the improper
transfer of the assets of two pension plans sponsored by bankrupt SCT
Yarns Inc. headquartered in Chattanooga, Tennessee.
“The department will vigorously pursue individuals
who knowingly violate the law,” said Bradford P. Campbell, acting
assistant secretary of labor for the Employee Benefits Security
Administration (EBSA). “Our action today is designed to recoup for the
plan any fees received by the defendant.”
The lawsuit alleges that David Johnston served as an
escrow attorney for various transactions involving at least $6.2 million
in plan assets, and knowingly participated in the improper transfer of
plan assets to companies affiliated with SCT Yarn president Kenneth H.
Combs Jr. He also allegedly received fees from assets of the plans
following the improper transfers.
The suit, filed in U.S. District Court for the
Eastern District of Tennessee, seeks to require that Johnston disgorge
all profits and financial benefit received from the improper
transactions with plan assets.
SCT manufactured yarn for the textile industry. The
company sponsored two retirement plans covering 771 participants,
according to the latest data available to the Labor Department. The
Pension Benefit Guaranty Corporation has taken over the retirement plans
for hourly and salaried employees and will pay benefits to retirees.
The civil investigation was conducted by the Atlanta
regional office of EBSA. Employers and workers can reach the Atlanta
office at 404.562.2156 or through EBSA’s 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 monetary results
of $1.7 billion related to pension, 401(k), health and other benefits
for millions of American workers and their families.
(Chao v. Johnston)
Civil Action No. 1:06-cv-00226
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