DOL Sues Wholesaler to Recover Nearly $900,000 in Pension Assets
The Department of Labor has sued defunct Vinyl-Mark Products Inc. of Hueytown, Ala., and the company's pension and profit sharing plan trustees for allegedly misusing $898,259.69 in plan assets to pay the operating expenses of the company (Solis v. Vinyl-Mark Products Inc.).
The lawsuit alleges that the company, formerly known as First Alabama Supply Co. Inc., and trustees Willard D. Bailey Jr. and Jessie Mae Bailey violated the Employee Retirement Income Security Act (ERISA). The trustees allegedly made a series of transfers from the plans to the operating accounts of the company at various times between October 2004 and February 2007.
"The department will not tolerate the misuse of workers' retirement savings to subsidize corporate expenses," said Phyllis C. Borzi, assistant secretary of the Labor Department's Employee Benefits Security Administration (EBSA). "Our legal action is designed to ensure these workers are made whole and prevent the trustees from misusing employee benefit plan assets in the future."
The suit seeks a court order to require that all defendants restore all losses incurred by the plans and disgorge any profits or illegal gains, and to appoint an independent fiduciary to oversee the plans. The department also asks that the trustees be permanently barred from serving in a fiduciary capacity to any plan governed by ERISA and that the trustees' retirement accounts be offset to repay losses and lost opportunity costs owed to the plans. Money offset will be re-distributed to the accounts of the remaining participants covered by the plans.
The company was a wholesale distributor of vinyl siding, accessories, and windows. It sponsored a defined benefit plan for 59 participants and a profit sharing plan covering 29 participants. As of Dec. 31, 2005, the plans held cumulative assets of $701,361.