DoL Obtains Consent Decree in Land Purchase Deal

March 18, 2004 ( - A consent decree has been obtained by the US Department of Labor (DoL) in a case of profit sharing plan assets used by plan's trustee to purchase undeveloped land in Iowa.

>The consent decree requires the former owner of Valley Restaurant Inc, Carl Sierp, to restore $39,751 to the company’s profit sharing plan.  This came after the DoL charged Sierp with violations of the Employee Retirement Income Security Act (ERISA) and his trustee duties for failing to diversify the plan’s investments, according to a news release.

>The DoL contends Sierp – the trustee of Valley Restaurant’s profit sharing plan – violated his duties as a plan trustee when he sold the mutual fund shares of the plan and purchased 27.96 acres of undeveloped land in Iowa in 1981 and 1982.  Ultimately, this purchase left the plan unable to make the required distribution to participants.  To remedy the situation, Sierp made a series of personal loans to the plan, which the DoL said was an ERISA no-no.

In addition to repaying the plan assets, the decree requires Sierp to file a final annual report for the plan and terminate the plan.  Sierp will be allowed to assume title to the land as his benefit distribution, after restoring money representing the value of the participants’ interest in the land.

Valley Restaurant, Inc. ceased operations in 1988 and sold some of its assets to a new owner.  The plan had 26 participants and $39,751 in net assets as of Feb. 19, 2004.