DSI Contracting, Inc. will pay the Department of Labor (DOL) $1.3 million to remedy allegations that it breached fiduciary duties with regard to its employee profit sharing plan. A complaint was filed against the company and Burgess Baird Jr., trustee, for prohibited transactions. Through its investigation the DOL learned that Baird and the company used the plan’s funds to purchase real estate contiguous to a subdivision that DSI was developing. Baird also issued loans to participants for amounts exceeding the terms as outlined within the plan, with the loan proceeds used to invest in the subdivision under development. Further, Baird issued a loan from the plan to a real estate company for the purpose of buying lots in the subdivision. He also did not attempt collection of those participant loans or the loan to the real estate company, leading to sizable losses to the plan.
The DOL requested that the court require the defendants to restore the losses, inclusive of interest occurring as a result of the breach of fiduciary obligations, and reverse all prohibited loan transactions. Further, the DOL requested that the defendants be permanently banned from serving as fiduciary, administrator, officer, trustee, custodian, agent, employee or representative of any employee benefit plan subject to ERISA, or from having control over the assets of any such plan. The DOL also requested appointment of a successor fiduciary at the defendants’ expense.
www.bizjournals.com; August 5, 2016.