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Release Date: March 23, 2006
Release Number: 06-256-NEW/BOS 2006-077
Contact Name: John M. Chavez
Phone Number: 617.565.2075
New York, 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, New York. 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.
(Chao v. Cohen)
Civil Action Number 2:04-CV-1921-ADS-WDW
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