The U.S. Department of Labor has settled its
lawsuit against a Warren, Mich. profit sharing plan and its officials, who
allegedly failed to forward employee contributions through payroll withholding
to the plan and retained the money in the general assets of the plan sponsor
and its subsidiaries.
Alan J. Ferrara of law firm of Finkel, Whitefield,
Selik, Raymond, Ferrara & Feldman, P.C., was appointed by the court as an
independent fiduciary to marshall the remaining assets of the North American
Financial Services Company (NAF-Tech) Employees Profit Sharing Plan and
to distribute them to eligible participants, effectively liquidating the plan.
Defendants Daniel Thomas, William Bates and Eric Smith were ordered to pay
specific amounts to the independent fiduciary to be held for the benefit of
plan participants. According to Ferrara, plan trustees Thomas and Bates already
have deposited their required amounts with him.
The final individual plan defendant, Stephen
Macdonald, was barred from serving as a fiduciary to any employee benefit plan
subject to the Employee Retirement Income Security Act (ERISA), for a period of
two years. Macdonald was the chief financial officer of NAF-Tech and Smith was
the companys chief executive officer.
The plan was established to provide employees of
NAF-Tech and its three wholly-owned subsidiaries (North American Financial
Group, North American Insurance Services, Inc. and North American Capital
Advisors, Inc.) with benefits upon retirement, disability or death.
From Dec. 2, 1996 through Aug. 8, 1997, the plan
allegedly suffered losses of $22,636.54, including lost earnings. The plan had
42 participants and assets of $364,701 on Dec. 31, 1997, as reported in the
Annual Report Form 5500 filed with the department by the plan. Twenty-nine
participants will be affected by the settlement.
Joseph Menez, regional director of Pension and
Welfare Benefit Administrations Cincinnati office, said, In
addition to ensuring that plan participants contributions are returned in
this case, we wanted to emphasize that our goal is to let consumers know that
the department is only a phone call away to help protect the benefits promised
by employers. Our telephone number is 859-578-4680. And we cant express
too often that we are here to help with any problems relating to private-sector
pension and health plans.
The consent order and judgment, entered in the
federal district court in Detroit, Mich., on June 20, resulted from an
investigation conducted by the Cincinnati Regional Office of PWBA into alleged
violations of ERISA. The departments lawsuit and consent order/judgment
were filed simultaneously on June 5.
(Herman v. Daniel Thomas, et al.) Civil Action
No. 00-60169 (George Caram Steeh) |