The U. S. Department of Labor yesterday sued the
former operators of bankrupt U. S. Staffing, Inc., a Houston, Texas, employee
leasing firm, for failure to transmit employee contributions for pension and
health benefits to the trust account of plan clients and misusing plan assets
to benefit others.
U. S. Staffing, Inc. provided payroll
administration and health insurance benefits for employees of small business
clients. U.S. Staffing established a trust to provide these benefits, and the
trust constitutes an employee benefit plan governed by pension law -- the
Employee Retirement Income Security Act (ERISA).
The lawsuit alleges that W. Sherman Adcock, James
D. Smith and Cruz C. Alderete violated ERISA by improperly handling plan
assets. At the time of the improper actions, Adcock and Smith were officers and
directors of U. S. Staffing, Inc. and Alderete was the administrator and
trustee of the trust.
Adcock and Smith allegedly failed to transmit to
the plans' trust account with Paine Webber contributions withheld from employee
paychecks over the period September 1994 to March 1995. The defendants also
were alleged to have transferred and used $10,155 in plan assets as collateral
and payment for a loan to benefit a party in interest. In addition, defendants
Adcock and Smith used $3,000 of plan assets to pay legal expenses for a
transaction in which the plan received no consideration.
As relief, the lawsuit seeks a court order to
require that the defendants restore all losses with interest to the plan, undo
any transactions prohibited by federal pension law and be permanently barred
from serving in positions of trust to any other plan governed by ERISA.
"Our goal is to assure that consumers know that
the department is only a phone call away to help protect the benefits promised
by employers," said Bruce Ruud, director of the Dallas Regional Office of the
department's Pension and Welfare Benefits Administration. "Employers and
workers can reach us at (214) 767-6831 for help with any problems relating to
private-sector pension and health plans."
The lawsuit was filed on October 16, 2000 in
federal district court in Houston. The case resulted from an investigation
conducted by the Dallas Regional Office of the Labor Department's Pension and
Welfare Benefits Administration into alleged violations of ERISA.
(Herman v. Adcock) |