Compliance March 14, 2006

DoL Hits GA Firm with Suit over Plan Abandonment

March 14, 2006 (PLANSPONSOR.com) - Federal officials have filed a federal court lawsuit against the fiduciaries of a Jefferson, Georgia firm over allegations they extended improper loan payments from the firm's employee stock ownership plan (ESOP) to their parent company.
Reported by

A news release from the US Department of Labor (DoL) said more than $170,000 in loan payments were transmitted to Rehab Consultants of Florida (RCF) and the company officials then abandoned the plan altogether.

According to the lawsuit, plan committee members – Joseph Gentzel, Mary Ann Gentzel, Grayson Gentzel, Jennifer Heidt Gentzel, and Graeme Gentzel – violated the Employee Retirement Income Security Act (ERISA) by allowing the plan to engage in a prohibited transaction. The DoL charged that after the loan payments, the defendants dissolved RCI and stepped down from their posts without seeing that they were replaced.

The value of the stock purchased by the ESOP declined from $19.74 per share in 1996 to $.79 per share in 1998 and is currently worthless.  

The suit seeks a court order requiring the defendants to restore to the plan all losses with interest.   The suit also asks the court to permanently bar the defendants from serving in a fiduciary capacity to any plan governed by ERISA and to appoint an independent fiduciary to manage, terminate and distribute plan assets to eligible participants.

«