The U.S. Department of Labor has filed a lawsuit
alleging that Wade & Sons, Inc. and its owner improperly transferred funds
from the companys profit sharing plan, thereby resulting in more than
$146,600 in losses to the plan.
According to the departments lawsuit,
company President George Phelps Wade, who is the sole trustee of the plan,
allegedly arranged for the fund to loan the company a total of $92,000 between
July, 1991, and September, 1997. In addition, the lawsuit alleges that the plan
also transferred $76,600 directly to Wade between January, 1991, and January,
1994. The loans and/or transfers were made without formal documentation,
interest payments or collateral.
Prior to the filing of this lawsuit, the
defendants repaid $22,000 of the loans, leaving a balance owed of $146,000,
plus the lost opportunity cost to invest those funds in a prudent investment
vehicle. The plan had 22 participants and assets totaling $154,333 as of Dec.
31, 1998. Wade & Sons, Inc., based in Macon, Ga., specialized in industrial
repairs and replacements for manufacturing equipment.
The lawsuit asks the court to order the defendants
to restore to the plan all of the losses, including the lost earnings or
interest, and to offset any claims that Wade might have against the plan. It
also asks that Wade be removed from his position with the plan, permanently
barred from serving this or any other plan subject to the Employee Retirement
Income Security Act (ERISA), and a successor trustee be appointed to take over
the plans operation and, if necessary, to terminate the plan.
The lawsuit is the result of an investigation
conducted by the departments Atlanta Regional Office of the Pension and
Welfare Benefits Administration. It was filed Dec. 12 in federal district court
in Macon, alleging self-dealing violations of the federal pension
law.
(Herman v. Wade & Sons, Inc.) Civil
Action # 5:00-CV-583-3 |