According to a DoL press release, the lawsuit alleges the trustees of the employee stock
ownership plans and eligible individual account plans of DirecTECH Holding Co.
Inc. and its former subsidiaries, DirecTECH Inc., Michigan Microtech Inc., JBM
Inc., and DirecTECH
Southwest Inc., as well as the
companies’ boards of directors and the parties who sold stock at inflated
prices to the plans in
seven separate transactions caused millions of dollars of losses to the plans
and their participants.
The suit says
the board of directors and trustees to the plans violated ERISA by causing or
allowing the plans to pay inflated prices to purchase company stock over the
period of December 31,
2003, through September 8,
2006. During the period,
the plans purchased company stock at a total price in excess of $60 million,
which had a reported value of approximately $18 million as of December 31, 2007, the press release said.
also claims the plans’
fiduciaries used flawed
valuations for the stock transactions, failed to select a qualified appraiser
for the stock transactions, and provided inaccurate and incomplete information
to the appraiser and his firm.
seeks a court order requiring the fiduciaries to restore to the plans all
losses with interest and requiring the fiduciary defendants to forfeit their
interests in plan accounts to offset money owed to the plans, and
requiring the defendants who sold
stock to the plans return all profits they received. The suit
also seeks to bar all the
defendants from serving as fiduciaries and service providers to any plan
governed by ERISA in the future.