The U.S. Department of Labor has sued a Connecticut company and its president for allegedly misusing more than $1.8 million in assets of the company’s cash-balance pension plan.
Filed in U.S. District Court for the District of Connecticut, the lawsuit claims that Macristy Industries and its president Jeffrey Barlow violated the Employee Retirement Income Security Act. Since the fall of 2002, the DOL charged, they improperly transferred up to $2.6 million assets of the company’s cash-balance plan to accounts of the company and filed false reports with the Labor Department—or failed to file them at all.
A phone call to Barlow seeking comment on the lawsuit was not immediately returned.
The DOL charged that the company, a New Britain, Connecticut-based manufacturer of tubular plumbing supplies and aerospace parts, used about $773,186 for legitimate plan benefits and expenses and diverted the rest—about $1.8 million—to pay for company operations. “The department will not tolerate workers’ retirement savings being abused and used as a piggy bank for the convenience of management,” said Secretary of Labor Elaine Chao.
Chao added that the lawsuit, filed behalf of the workers, seeks full restitution, compliance with federal disclosure requirements, and plan integrity in the future. The DOL wants a court order requiring the defendants to restore to the plan all losses with interest, to disgorge all the profits they allegedly received, and to require the company to file appropriate annual reports.
The DOL is also asking asks the court to bar Barlow from service as a fiduciary to any ERISA plan and to appoint an independent fiduciary to be the plan’s trustee.
Macristy Industries Inc. is a holding company that owns Connecticut Stamping and Bending Inc., Tube Bends Inc., The Sunrise Realty Corp., and Plumb E-Z Manufacturing Co. As of January 2003, Macristy’s Cash Balance Retirement Income Plan had about 286 participants, according to DOL.