A federal judge has ordered an Illinois home health care provider and two of its officers to repay a total of $1,736,339 to the Alliance Home Healthcare Inc. Profit Sharing Plan.
An investigation by the Department of Labor’s (DOL’s) Employee Benefits Security Administration in Chicago found that Palos Hills-based Alliance Home Healthcare Inc., its President Dalisay Sulit and Secretary/Treasurer Reginaldo Sulit improperly transferred and distributed more than $1.6 million from the profit sharing plan to themselves, the company, and others.
The department filed a lawsuit in August 2015 asserting that these plan withdrawals were not in the best interests of the participants and beneficiaries of the employee benefit plan, as required by the Employee Retirement Income Security Act. The $1,601,908 in withdrawn plan assets were used for non-plan purposes, including directly benefitting the company.
According to the lawsuit, Alliance Home Healthcare established its profit sharing plan on January 1, 2000. As of December 31, 2006, the last year an annual report was filed, the plan had 127 participants and $1.6 million in assets.
The DOL alleged that for plan years 2009 through 2014, Reginaldo Sulit and Alliance failed to direct the trustees to perform year-to-year plan valuations or an annual accounting. This meant that Reginaldo Sulit and Alliance did not have updated account information upon which they could accurately calculate individual participant account balances for each plan participant and determine correct distribution amounts for eligible plan participants.
From January 1, 2008, until the filing of the lawsuit, Reginaldo Sulit, as plan trustee, made distributions from the plan. Plan assets were assigned sometimes to Reginaldo Sulit, although he was not eligible to receive plan distributions, sometimes to the company accounts for Alliance, and sometimes to Dalisay Sulit. Based on her participation in the plan, as of December 31, 2008, Dalisay Sulit’s individual account balance was approximately $269,300.11. From May 30, 2012 to February 27, 2014, she received approximately $754,699.90 in excess of her December 2008 account balance.
In addition to restoring the $1,601,908 in withdrawn plan assets, the judgment also requires the trustees to repay lost opportunity costs of $134,431, for a total of $1,736,339.