Compliance

DOL Secures Settlement Over Improper Asset Liquidation

A Chicago-based ophthalmologist was accused by the DOL of improperly diverting money from a DB plan’s investment accounts. 

By John Manganaro editors@assetinternational.com | December 12, 2016

The U.S. Department of Labor (DOL) has resolved a lawsuit to restore $138,000 owed to the employee benefit plan of Chicago ophthalmologist Nicholas Caro.

Specifically, Caro was accused of “liquidating $263,951 from the plan’s investment accounts and transferring the funds to accounts held in his own name, accounts held in the name of a former medical practice, various accounts, including some accounts held by parties in interest.”

Per an investigation conducted by the department’s Employee Benefits Security Administration (EBSA), Caro reportedly transferred the funds to pay for, “among other things, the medical practice’s operating expenses, and … not to provide benefits to the plan’s participants or beneficiaries.”

The DOL notes that Caro filed for individual Chapter 7 bankruptcy protection in Illinois on July 15, 2011, and sought to discharge his debt to the plan. In 2011, the DOL first filed a lawsuit to recover funds owed to the defined benefit plan and to determine dischargeability of debt under Caro’s bankruptcy case.

According to the DOL, on July 16, 2016, Caro restored $138,567 in restitution from non-bankruptcy estate assets to the clerk of the court for restitution to plan participants pursuant to a judgment entered in a related criminal proceeding, captioned USA v. Nicholas C. Caro, Case No. 12 CR 891, in the U.S. District Court for the Northern District of Illinois.

“Excluding the percentage amount of principal benefits owed to Caro and one other employee who received her benefit, the restitution was sufficient to resolve his civil liability to the plan,” DOL says.

A consent order and judgment permanently enjoins Caro from serving as a fiduciary or service provider to any Employee Retirement Income Security Act-covered plans in the future. (Also see, “Investment Industry Must Double Down on Transparency and Fairness.)