Elmhurst, ILImagine the shock and dismay upon learning that your employer may have skimmed nearly $2.8 million from your employee ERISA plan. Not only is the plan diminished by that amount, there is also the potential for losses stemming from missed investment opportunities and incurred losses of interest growth.
A release from States News Service (8/30/12) in August referenced an investigation by the US Department of Labor's Employee Benefits Security Administration that found improprieties involving the employee savings plan at A.B.D. Tank and Pump Co. (ABD Tank) based in Elmhurst, Illinois.
The A.B.D. Tank and Pump Co. 401(k) and Profit Sharing Plan and Trust (The Plan) was established in 1992 as a retirement plan for the company's employees and is funded by employer contributions, according to the release. ABD Tank president and sole owner Keith Davis was identified in the statement as the trustee of the plan.
It was alleged in a subsequent ERISA lawsuit that Davis had undertaken a series of withdrawals and transfers from The Plan to himself and the company over a four-year period beginning in December 2006 and ending November 2010.
The specific amount as identified in the ERISA pension lawsuit was $2,767,051. The alleged withdrawals and transfers were in violation of the Employee Retirement Income Security Act (ERISA, as amended 1974), which sets rules and regulations for employee savings plans and holds trustees of such plans to a fiduciary duty to operate and undertake retirement or employee stock plans in the best interests of the employees.
"The Labor Department is committed to holding accountable those who are entrusted with the assets of workers' retirement plans," said Phyllis C. Borzi, assistant secretary of labor for employee benefits security, in a statement. "We will continue to help workers obtain their rightful benefits when plan fiduciaries violate the law."
Under the terms of a default judgment issued by a federal court, ABD Tank is required to restore the missing funds, as well as any losses incurred by Plan participants and lost opportunity costs. Further, ABD Pump is also barred under ERISA from serving as either a service provider or fiduciary for any employee 401k plan governed by ERISA.
A separate complaint against Davis, with regard to lost ERISA benefits, remained pending as of August 30, according to the statement.
With traditional pension plans on the decline given their costs and the frequent mobility of the modern employee, more Americans are depending on plans that provide employee stock options, or other 401k plans and the ERISA benefits they provide, to fund a retirement. Such plans depend on prudent investment and management by Plan fiduciaries, in order for the Plan to grow and benefit the greatest number of employee participants in the most beneficial way.
Fiduciaries will sometimes make imprudent investments or withdrawals that are not in the best interests of ERISA pension plan participants, a direct violation of ERISA for the purpose of overseeing the ERISA plan. Various lawsuits over the years have alleged misdeeds involving the backdating of stock options, which benefit certain holders of stock (usually the principles of a company), but can translate to losses for other employees invested in the company.
If you or a loved one have suffered losses in this case, please click the link below and your complaint will be sent to a securities fraud lawyer who may evaluate your Employee Stock Option claim at no cost or obligation.