The suit names as defendants Rembar owner and CEO Frank Firor and First Bankers Trust Services Inc., which was hired as an independent fiduciary and trustee, and alleges the plan was allowed to purchase overvalued company stock.
The DOL claims that in June 2005, First Bankers Trust Services allowed the plan to purchase 100% of the company’s stock from Firor and Firor’s relatives for $15.5 million. An investigation by the Employee Benefits Security Administration (EBSA) determined that First Bankers Trust Services failed to comply with its duty to understand the valuation report that set the purchase price, identify and question assumptions in the report, and verify that the conclusions in the report were consistent with the company’s financial data. As a result of First Bankers Trust Services’ failure to comply with its fiduciary duties, the plan overpaid for the stock and suffered losses.
The suit seeks, among other things, to recover jointly from First Bankers Trust Services and Firor all losses suffered by the plan.Last month, First Bankers Trust Services was named in a lawsuit alleging the Maran Inc. ESOP was allowed to purchase overvalued company stock (see “DOL Sues Trustee for Purchasing Overvalued Stock”).