Compliance June 3, 2004

EBSA: Executive Dipped Into Plan Money for Legal Fees

March 18, 2003 (PLANSPONSOR.com) - The US Department of Labor (DoL) has taken a Chicago company and its president to court for improperly using plan assets to pay legal fees to defend against separate DoL administrative charges.
Reported by

The DoL said it filed the suit in US District Court in Chicago against Current Development Corporation (CDC) and president George Klein Jr., who served as trustee for the company’s profit sharing and money purchase plans.

The federal officials said the $38,388 was used to defend a lawsuit filed with an administrative law judge on behalf of the Employee Benefits Security Administration (EBSA) for not filing ERISA-mandated annual reports.

The latest DoL suit charged that Klein failed to return the plan money used to pay CDC’s legal bills after the administrative law judge found against CDC. The plans had 58 participants and $2,467,006 in assets as of September 30, 1999.

The department is seeking to remove Klein from his position with the plans, permanently bar him from serving any ERISA-covered plan, and to appoint an independent fiduciary to take over the plans.

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