October 23, 2013 (PLANSPONSOR.com) – The Department of Labor (DOL) has obtained a consent order for fiduciaries to repay funds to an employee stock ownership plan (ESOP).
The order requires fiduciaries of the Parrot Cellular ESOP to pay $4,181,818 to the
plan. The settlement resolves a lawsuit filed in April 2012 after an
investigation by the DOL’s Employee Benefits Security Administration found the
fiduciaries violated the Employee Retirement Income Security Act (ERISA) by
causing or permitting the ESOP to purchase Parrot Cellular stock for more than
fair market value.
The suit, filed in the U.S. District Court for the Northern
District of California, named the following as defendants: Dennis Webb, the
principal owner of California-based Entrepreneurial Ventures Inc. (EVI); Matthew
Fidiam and J. Robert Gallucci, EVI executives and ESOP trustees; and Consulting
Fiduciaries Inc., an Illinois company that served as the independent fiduciary
for the ESOP during a November 2002 stock purchase. EVI operates Parrot
Cellular telephone retail stores and is the sponsor of the worker retirement
“Employee stock ownership plans can have great benefits for
workers, but only if they adhere to the laws that govern them,” said Secretary
of Labor Thomas E. Perez. “We are very pleased to have resolved this matter in
a way that brings the plan into compliance with the law and benefits the plan’s
Under the terms of the settlement agreement,
Consulting Fiduciaries agreed to pay $2 million to the ESOP to settle the
allegations. Webb, Fidiam and Gallucci agreed to collectively pay $1.5 million,
and Webb agreed to individually pay an additional $681,818.