The U.S. Labor Department (DOL) obtained a judgment against fiduciaries of a Gruber Systems Inc. employee stock ownership plan (ESOP) in California in a lawsuit suggesting the fiduciaries paid inflated prices for the stock.

The judgment came out of an investigation conducted by the department’s Employee Benefits Security Administration (EBSA), which initially filed a complaint in May 2015, “alleging that the defendants caused the company’s employee stock ownership plan to purchase company stock for significantly more than fair market value, resulting in losses to plan participants.”

The suit alleged money flagged for retirement investments should have been set aside to fund the retirement accounts of Gruber retirees, “but was instead steered into stock purchases to fund the financially distressed company.” The suit sought a reversal of prohibited stock transactions, the restoration of any related plan losses, and a court order requiring the defendants to account for and restore losses to plan participants.

Additionally, the department sought to permanently enjoin Hoskinson, Gruber’s CEO, from serving as a fiduciary or service provider to any plan covered by the Employee Retirement Income Security Act, his removal from any positions as a plan fiduciary, and the appointment of an independent fiduciary to distribute the plan’s assets.

According to DOL, the judgment and order “permanently enjoins the defendants from engaging in any further violations of the Employee Retirement Income Security Act (ERISA) and permanently bars them from serving as a fiduciary or service provider to any ERISA-covered employee benefit plan.” Valencia, California-based Gruber Systems, and CEO John Hoskinson, have been ordered to return $1.1 million to the company’s ESOP for the losses. The judgment also requires Gruber Systems and Hoskinson to pay $220,000 in civil money penalties and orders the newly-appointed plan trustees to distribute the plan’s assets to the participants and beneficiaries, and terminate the plan.