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Release Date: December 28, 2006
Release Number: 06-2107-SAN (SF-158)
Contact Name: Roger Gayman/Deanne Amaden
Phone Number: 415.975.4742/415.975.4741
San Francisco - The U.S. Department of Labor
has sued UltraCard Inc. of Los Gatos, California, and its president for
failure to remit employee contributions and loan repayments to the
company’s 401(k) plan in a timely manner.
“The Labor Department is committed to protecting
the benefits of America’s workers and retirees,” said Francis C.
Clisham, regional director in San Francisco for the Labor Department’s
Employee Benefits Security Administration (EBSA), which investigated the
case. “We will not hesitate to act to hold accountable those who
misuse workers’ retirement assets.”
The suit alleges that the company and its president,
Daniel Kehoe, violated the Employee Retirement Income Security Act (ERISA)
by failing to remit $27,193 in employee contributions to the plan from
April 15, 2002 through July 15, 2002. The defendants also failed to
terminate the plan and distribute its assets to eligible participants.
The suit seeks to appoint a successor to manage the plan, which has been
without oversight since the company ceased doing business.
The suit was filed in federal district court in San
Francisco. At the time of the improper transactions, UltraCard was the
plan administrator. The company was in the business of developing data
storage using “Smart Card” technology. When UltraCard ceased
operations in June 2002, the plan covered 33 participants.
The suit seeks to require the defendants to restore
all contributions and lost earnings to the plan. It also seeks to remove
Daniel Kehoe as a fiduciary, permanently bar him from serving as a
fiduciary or service provider to any employee benefit plan covered by
ERISA and appoint an independent fiduciary to terminate the plan and
distribute the assets to eligible participants and beneficiaries.
The department’s suit resulted from an
investigation conducted by EBSA’s San Francisco regional office. In
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. Employers and workers can reach the regional
office at 415.975.4590 or through its toll-free number, 1.866.444.EBSA
(3272), for help with problems relating to private-sector retirement and
health plans.
Employers with similar problems who are not yet the
subject of an investigation by EBSA may be eligible to participate in
the department’s Voluntary Fiduciary Correction Program (VFCP).
Participation in the program 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.
(Chao v. UltraCard, Inc.)
Civil Action No. C 06-7822 RMW (PVT).
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