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New Hampshire Employer Repays $100,000

April 15th, 2008 Posted by Amelia

An employer in Salem, New Hampshire recently agreed to restore $100,000 to a company profit-sharing plan to resolve a lawsuit brought by the U.S. Department of Labor.

Richard E. Landry Sr., owner and operator of Landry Architects of Salem, New Hampshire, has agreed to repay $100,000 to the company’s employee profit-sharing plan. The action came under a consent judgment approving the out of court settlement of a lawsuit filed by the U.S. Department of Labor, Employee Benefits Security Administration, as enforcement of the Employee Retirement Income Security Act (ERISA).

The lawsuit, filed in June 2006, alleged that Landry violated ERISA when he failed to adequately monitor and control the activities of Bradford D. Bleidt and Bleidt’s companies, Allocation Plus Asset Management and Financial Perspectives Planning Services. Landry also failed to oversee and control plan assets, and to obtain a bond to protect the plan’s assets.

According to the U.S. DOL, Bleidt and his companies provided investment and financial management services to the plan between January and November 2004. During that time, Bleidt used the plan’s funds for his own benefit and was convicted in December 2005 on criminal charges that resulted in his being sentenced to 11 years in prison.

“The law requires those who administer employee benefit plans to do so in a careful and prudent manner solely for the benefit of participants,” said Bradford P. Campbell, assistant secretary for the Labor Department’s Employee Benefits Security Administration (EBSA). “The department’s legal action sends a clear message that employers and plan trustees cannot neglect their fiduciary obligations to oversee the handling and investment of plan assets.”

The judgment, entered in U.S. District Court for the District of New Hampshire, orders Landry to repay to the plan a total of $100,000 and a civil monetary penalty of $10,000. Landry also was ordered to resign as the trustee and fiduciary to the plan, and to retain the services of a disinterested institutional trustee to serve as fiduciary of the plan.

This case was investigated by the EBSA Boston Regional Office. Employers and workers can reach EBSA at 617.565.9600 or toll-free at 1.866.444.3272 for help with problems relating to private sector retirement and health plans.

In the fiscal year 2007, EBSA recovered $1.5 billion related to pension, 401(k), health and other benefits for millions of American workers and their families.

Back in the 1970s, federal guidelines for managing employee retirement plans were spelled out in Employee Retirement Income Security Act of 1974, (ERISA). Some time later, lawmakers added guidelines for managing profit-sharing accounts and for managing healthcare plans.

An incident earlier in the year prompted the need for the law, and a way to enforce it and punish violators. The incident occurred when a Miami company raided $1.1 million from its workers’ profit sharing accounts, ostensibly as a way to boost its operating account.

Raids on employee benefit accounts continued to occur, despite the law, and the U. S. Department of Labor took action. In 2006, the Employee Benefits Security Administration (EBSA) recouped over a billion dollars in pension, 401K, health and other benefits funds which have been misappropriated by employers.

In July of 2007, another company was brought to justice. A New Britain, Connecticut firm was ordered to repay over two million it had stolen from its employees’ retirement account.

Secretary of Labor Elaine L. Chao reacted strongly to this company’s raid, commenting, “Workers’ retirement plans are not piggy banks for company executives.” She continued by adding, “This legal action restores $2.1 million to these workers’ retirement plan and prohibits the company’s president from ever again serving as a fiduciary of an ERISA-covered employee benefits plan.”

Though much has been accomplished by the Department of Labor in recovering misappropriated benefits accounts, officials worry that the monies are merely the tip of the iceberg