The U.S. Department of Labor sued Erickson
Cosmetics Company, its former president and controller for self-dealing
violations of the federal pension law, which resulted in losses to the pension
plan and unpaid medical claims for benefit plan participants and
beneficiaries.
The pension plan had 87 participants and assets of
$773,097 as of Nov. 30, 2000.
The department alleged that the defendants,
including then company president Wallace A. Erickson and controller William
Bianucci withheld from employees pay their voluntary contributions to the
plan but failed to remit the employee contributions to the 401 (k) plan from
Sept. 22, 1998 through Oct. 21, 1998 and again from March 5, 1999 through March
19, 1999. The lawsuit further alleges that the defendants withheld loan
repayments to the plan during the same time periods and retained both the
withheld employee contributions and loan repayments in the companys
general assets.
Also, the lawsuit alleges that when William
Bianucci resigned his sole trustee position with the 401(k) plan on May 13,
1999, no successor trustee was named by the company. The company ceased
operations on or about April 1999 and was involuntarily dissolved by the State
of Illinois this year. Since Bianuccis resignation, participants and
beneficiaries have been unable to obtain distributions from their individual
account balances.
In regard to the benefit plan, the Labor
Department alleges that from Jan. 1, 1999 through March 19, 1999, $20,978.66
were withheld from weekly payroll checks for benefit plan premiums and were not
remitted to the insurance carrier, Blue Cross/Blue Shield. Later the insurance
carrier terminated the contract it had with the company because of the
nonpayment of premiums, leaving estimated unpaid medical claims of
$68,251.22.
The lawsuit is seeking to have the court order
Erickson and Bianucci to pay restitution to both the 401(k) and benefit plans
for any of the losses, plus interest, incurred by their fiduciary breaches of
the Employee Retirement Income Security Act (ERISA), as well as calling for
Bianuccis individual account balance to be offset if the losses cannot be
restored otherwise by Erickson and Bianucci.
Further, the lawsuit seeks to have Erickson
permanently barred from serving as a fiduciary or service provider to any
ERISA-covered employee benefit plan and for Erickson Cosmetics to be removed
from its fiduciary position and replaced by an independent fiduciary to
administer the 401(k) plan until it is terminated and to distribute its
assets.
Our goal is to assure that consumers know
the department is only a phone call away to help protect the benefits promised
by employers, said Kenneth Bazar, director of the Chicago Regional Office
of the departments Pension and Welfare Benefits Administration., which
investigated the case. Employers and workers can reach us at (312)
353-0900 for help with any problems relating to private-sector pension and
health plans.
The lawsuit was filed Dec. 27 in Northern District
of Illinois, Eastern Division, Federal Court in the Cook County, Ill.
(Herman v. Erickson Cosmetics Company, et al)
Civil Action No. OOC 8103 (Judge Bucklo) |