In February 2012, Phoenix Financial Holdings Inc. bought Lakes Area Advertiser Inc. and A.D.S. Delivery Service Inc., located in Antioch, Illinois. Brandy Williams, Wanda Knight and Dmazana Lumukanda were the owners of Phoenix Financial Holdings Inc. from February 2012 to October 2012, until the companies ceased operations.
The DOL alleges that between February 29 and August 1, 2012, Williams and Knight, both directors in the companies, failed to remit a total of $8,213.04 in employee contributions and loan repayments to the A.D.S. Delivery Service Inc. 401(k) Plan. The plan had six participants and incurred a lost opportunity cost of $1,651.
In addition, during the same time period, the defendants allegedly failed to remit a total of $26,621.31 in employee contributions and loan repayments to the Lakes Area Advertiser Inc. 401(k) Plan. The plan had 21 participants and incurred a lost opportunity cost of $5,483.
Lumukanda, as named trustee of the plan, improperly allowed the transfers from it and is liable, as co-fiduciary, for such transfers.
On September 10 of this year, the DOL filed Perez v. Williams et al. (Docket No. 1:13-cv-06461) in the U.S. District Court for the Northern District of Illinois, Eastern Division. The lawsuit seeks to compel the fiduciaries to correct the prohibited transactions in which they engaged or for which they are liable and to restore to the plan any losses, including lost opportunity costs, resulting from their fiduciary breaches. The total losses are estimated by the DOL to be $41,968.35.
The lawsuit also asks the court to remove the defendants from their positions as fiduciaries to both the Lakes Area Advertiser and A.D.S. Delivery Service and to permanently enjoin the defendants from serving as fiduciaries or service providers to any employee benefit plan subject to the Employee Retirement Income Security Act (ERISA). In addition, the lawsuit asks the court to appoint an independent fiduciary to terminate the plan and distribute its assets to qualified participants.
The full text of the DOL lawsuit can be found here.