The U.S. Department of Labor and Los Angeles-based Western Mixers Inc., a fruit and nut company, have reached an agreement to restore a total of $1,287,901 to the company's pension plan.
Under this consent judgment, which was entered this month in the U.S. District Court's Central District in Los Angeles, officers of Western Mixers are responsible for restoring $802,901 to participants' accounts within 10 days. During the investigation, Western Mixers repaid $485,000 to the plan for the total funds identified as missing.
With this agreement, unpaid contributions, unauthorized withdrawals and interest are to be fully recovered, which comes after an investigation by the Los Angeles Regional Office of the Labor Department's Employee Benefits Security Administration. According to the investigation, the company and two officers who acted as plan trustees over a five-year period did not make approximately $952,511 in mandatory employer contributions for the benefit of participants as well as beneficiaries.
The investigation also discovered that the same two officers and Western Mixers’ chief financial officer made $565,000 in unauthorized withdrawals from the plan accounts. Along with repaying the missing funds with interest, the defendants are also receiving a penalty equal to 20 percent of the recovered amount.
"This case demonstrates a clear breach of fiduciary duty," says Phyllis C. Borzi, assistant secretary of labor for employee benefits security. "Employers hold positions of trust that are violated when money intended for retirement benefits is directed to some other use. Individual trustees have a duty to protect a retirement plan and, as in this case, may be personably liable for the funds. The Labor Department is committed to protecting workers' retirement funds so that they can continue to provide for themselves and their families during retirement."
The court has selected an independent fiduciary to eliminate the plan and collect, marshal, pay out and administer plan assets. Western Mixers owners Frank L. Rudy and David H. Bolstad are no longer plan trustees and fiduciaries, and Robert J. Fischer, chief financial officer of Western Mixers, along with Rudy and Bolstad are permanently enjoined and restrained from violating the Employee Retirement Income Security Act as well as from serving as fiduciary or service providers to any ERISA-covered plan in the future.
EBSA is responsible for protecting the security of the retirement, health and other workplace-related benefits and oversees roughly 707,000 private sector retirement plans, 2.5 million health plans and other plans that cover benefits to more than 140 million Americans. In total, these plans contain more than $6 trillion in assets.
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