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.

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.

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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.

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