Archived News Release Caution: Information may be out of date.
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Release Date: 03/23/2001 Release
Number: 032 Contact Name: John M. Chavez Phone Number: 617.565.2075 |
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Two companies based in Manchester, New
Hampshire, and four
family members who jointly own them have repaid nearly $500,000 to an employee
profit sharing plan following a U.S. Department of Labor
investigation. |
A lawsuit was filed by the department on March 15,
2001, against Sylvester Sheet Metal, Inc. and Sylvester Realty Company, both
headquartered at 451 Pepsi Drive, Manchester, New Hampshire. Also named as defendants,
as joint owners of both companies, were Henry W. Sylvester, Sr., Michael R.
Sylvester, Glenn M. Sylvester and John J. Sylvester. |
The suit alleged violations of the federal
Employee Retirement Income Security Act (ERISA), which protects employee
pension and welfare benefit plans. ERISA is administered by the Labor
Departments Pension and Welfare Benefits Administration (PWBA). |
The lawsuit noted that between March 1996 and the
present time, Sylvester Sheet Metal, Inc., was the plan sponsor and plan
administrator of the Sylvester Sheet Metal Retirement Plan, a 401(k) profit
sharing plan set up for the benefit of the approximately 28 employees of the
company. The four owners were identified as trustees and fiduciaries of the
plan with the authority to exercise control over the disposition of the
plans assets. Both companies named as defendants and the four owners were
also identified as parties in interest (related parties), with
respect to the plan. |
ERISA requires that employee benefit plan assets
be used and invested solely for the benefit of the plans participants,
and specifically prohibits the use of plan assets for the benefit of any party
in interest, according to James Benages, Boston Regional Director for
PWBA. |
The suit alleged that, over a two year period, the
Sylvesters had caused the plan to make unsecured loans and mortgage loans to
Sylvester Sheet Metal, Inc. and Sylvester Realty Company totaling $871,182.06.
In all, five loans were made to the companies by the plan in violation of
ERISA. Over the period of years covered by the suit, the loan balances
represented from over 70% of total plan assets to around 40% of the plans
assets. |
As a result of PWBAs investigation and the
departments impending lawsuit, on November 24, 2000, the defendants repaid to
the plan the total outstanding loan balance of $471,074.86, Benages
noted. |
To ensure the defendants comply with the law in
the future, Labor Department attorneys recently filed the suit and a consent
judgment agreed to by the defendants with the U.S. District Court for the
District of New Hampshire. On March 20, 2001, the consent judgment and order
was signed by U.S. District Judge Steven J. McAuliffe. The order prohibits the
defendants, who neither admit nor deny the allegations, from future violations
of ERISA and enjoins them for ten years from serving as fiduciaries to any
ERISA-covered plan. |
The order allows John J. Sylvester to continue as
a fiduciary of the Sylvester Sheet Metal, Inc. Health Plan so long as it is an
employee welfare benefit plan administered by an independent third party.
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The Labor Departments legal action against
the defendants followed an investigation by the Boston Regional Office of the
Pension and Welfare Benefits Administration. That office is located in Room 575
of the John F. Kennedy Federal Building in Boston. The telephone number is
617.565.9600. |
(Chao v Sylvester Sheet Metal, Inc., et al
Civil Action No. 01-CV-92) |
U.S. Department of
Labor news releases are accessible on the Internet. The information in this
news release will be made available in alternate format upon request (large
print, Braille, audio tape or disc) from the Central Office for Assistive
Services and Technology. Please specify which news release when placing your
request. Call 202.693.7773 or TTY 202.693.7775. |
Archived News Release Caution: Information may be out of date.
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