The U.S. Department of Labor filed suit September 20, 2002, against Southprint International, LLC, an Arizona company that is currently in Chapter 7 bankruptcy, for alleged violations of the Employee Retirement Income Security Act (ERISA). The department is seeking to restore losses to an employee benefit plan that was based in Tempe, Arizona.
Filed in U.S. District Court for the District of Arizona, the suit results from an investigation by the Los Angeles regional office of the department's Pension and Welfare Benefits Administration (PWBA). Besides Southprint, the suit names as defendants Bruce Waldersen, president of Southprint, and the Southprint International 401(k) Profit Sharing Plan. Waldersen also served as the plan's trustee.
According to Billy Beaver, Los Angeles regional director for the PWBA, the alleged violations of ERISA occurred when Southprint and Waldersen failed to forward employee contributions and loan repayments withheld from employees' paychecks to the plan.
The plan is a defined contribution plan funded by a combination of employee contributions, discretionary employer matching contributions and discretionary employer contributions. Plan contributions were to be forwarded to Benefit Services Corporation, the plan's third party administrator. The department alleges that from April 10, 1998, through June 2, 2000, employee contributions and loan repayments totaling $172,465 were withheld from participant paychecks. However, only $138,897 was remitted to the plan.
The suit asks the court to require the defendants to restore all losses suffered by the plan, including lost opportunity income. The department is also asking the court to remove the defendants from their positions of trust with the plan and to appoint an independent fiduciary to manage and administer it. Associated costs are to be paid by the defendants, who must cooperate with the independent fiduciary.
Additionally, the suit asks the court to permanently enjoin the defendants from serving as fiduciaries of or service providers to any employee benefit plan covered by Title 1 of ERISA, and to award the Secretary of Labor costs of the civil action.
Employers with similar problems, who are not yet the subject of an investigation by PWBA, may be eligible to participate in the department's Voluntary Fiduciary Correction Program (VFCP). Participation in the VFCP requires employers to restore all losses to the plan, without PWBA enforcement actions and civil penalties, as well as applicable excise taxes. For more information about the VFCP see www.dol.gov/pwba.
