Court Orders Ill. Company to Restore Plan Assets

Under terms of a consent order and judgment, the fiduciaries and plan sponsor must restore $150,226 to the profit-sharing plan of Cougar Package Designers Inc. The judgment follows an investigation by the DOL’s Employee Benefits Security Administration, which found plan assets were improperly transferred and commingled with the Lemont-based company’s operating funds between January 1, 2009, and September 30, 2010, in violation of the Employee Retirement Income Security Act (ERISA).

Cougar Package Designers was dissolved in August 2010, following a lawsuit brought by MB Financial Bank. Through its owners, Cougar Packaging Solutions Inc. bought part of the assets of Cougar Package Designers and continued the operations of the company, but did not adopt the retirement plan. Because the plan was not adopted, its governing documents required that it be terminated.

The DOL litigated the case in the U.S. District Court for the Northern District of Illinois in Chicago. The case was designated as Seth D. Harris, Acting Secretary of Labor v. Mark A. Cottone; Cougar Package Designers Inc.; Cougar Packaging Solutions Inc., successor to Cougar Package Designers Inc.; Cougar Package Designers Inc. Profit Sharing Plan (Civil Action Number 1:13-cv-05078).

The lawsuit named Mark A. Cottone, president of Cougar Package Designers, and John Senese, president of Cougar Packaging Solutions. The suit alleged that instead of terminating the plan, Cottone informed participants in September 2010 that he needed all of the plan’s remaining assets to resolve the MB Financial Bank suit and to make possible the reorganization of Cougar Package Designers as Cougar Packaging Solutions.

The suit further alleged that the assets were used for company operations, as well as to pay creditors and fund the formation of Cougar Packaging Solutions Inc., a successor company. As of December 2010, the plan had less than $900 in liquid assets.

As part of the judgment, Cottone and Senese will each forfeit any claim they have to assets of the Cougar Package Designers Inc. Profit Sharing Plan. Cottone has been removed as the fiduciary to the Cougar Package Designers Inc. Profit Sharing Plan, and both Cottone and Senese are permanently enjoined from serving as a fiduciary or service provider to any ERISA-covered plan in the future. The court appointed Lefoldt & Co. P.A. to serve as the independent fiduciary to administer and terminate the plan and forward assets to qualified participants.