The U.S. District Court for the Middle District of Tennessee has ordered eye-care company Eye Centers of Tennessee LLC, its owner Dr. Larry E. Patterson, and its office administrator Raymond K. Mays to pay $971,622 in restitution to the company’s 401(k) plan after an investigation by the U.S. Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) found violations of the Employee Retirement Income Security Act (ERISA).
This restitution amount is in addition to the $788,850 the defendants paid to the plan in May 2016 as restitution in a related criminal matter. The court also ordered that Eye Centers of Tennessee LLC, Dr. Patterson, and Mr. Mays be removed as fiduciaries, and permanently enjoined from serving as fiduciaries to any future employee benefit plans.
The EBSA investigation found that Patterson and Mays—the plan’s trustees—used plan assets to pay $344,225 to Park Street Properties, owned by Mays. They also transferred $782,250 in plan assets to Maple Leaf Development LLC, which was owned by Patterson and Mays; $17,077 to Upper Cumberland Building Consultants LLC, which was owned by Mays’ brother; and $50,000 worth of plan’s assets back to Eye Centers of Tennessee.
In addition, Patterson and May used plan assets to purchase an 8,562-square-foot commercial property in 2006 for $285,000, and secured a mortgage for $325,000 for the property, which was then leased to the Pit Barbell Club, owned by Mays’ wife, for $5,000 per year. The monthly lease payments were only about one-sixth of the profit-sharing plan’s $2,618 monthly mortgage on the property.“Our goal is not only to protect employees who have suffered losses from their pension plans and to prevent violations in the future, but to ensure that other employers who follow the law are operating on a level playing field,” said Stanley Keen, EBSA Regional Solicitor in Atlanta.
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