Fiduciary Ordered to Restore Misused Assets to Retirement Plan

A plan fiduciary has been ordered to restore $111,331.71 to the Applied Technology Systems Inc. Retirement Plan.

The Department of Labor (DOL) had previously filed a lawsuit for Clark V. Hayes’ failure to segregate and remit employee contributions to the plan in violation of the Employee Retirement Income Security Act (ERISA). Hayes is a fiduciary to the plan. A default judgment was entered in that suit in July 2015.

According to the DOL, Hayes subsequently improperly transferred $210,662.18 of the plan’s assets from a plan account to an account in the name of the company and then used $98,581.75 of the amount for non-plan purposes. In order to protect the remaining assets of the plan, a default judgment signed September 17, 2015, appointed an independent fiduciary to take control of the assets held in the company account.

Now, a new judgment orders Hayes to restore $111,331.71 to the plan. This amount represents the improperly transferred plan assets that the independent fiduciary could not recover and lost opportunity costs. In addition, the judgment bars Hayes and the company from serving as a fiduciary or service provider to any ERISA-covered employee benefit plan in the future.

The court’s judgment can be viewed here.