DoL Recovers More than $12M for Calif. Company ESOP Participants

The U.S. Department of Labor has obtained consent judgments providing for restitution of more than $12 million by plan officials and service providers involved with the employee stock ownership plan sponsored by The Employee Ownership Holding Co. of Stockton, California, and Fife, Washington.

The judgments also provide for release of a fund holding more than $11 million, thereby making more money available to provide benefits to the ESOP’s participants and beneficiaries, according to the DoL. In addition, the defendants will be barred for at least 10 years from serving in a fiduciary capacity to plans, and the attorney service providers will be required to comply with strict requirements in connection with their future involvement with employee benefit plans.

Under the judgments and a settlement agreement filed in a related private lawsuit, the settling defendants must pay $8 million in cash into a settlement fund, pay $800,000 in civil penalties to the federal government and return property to The Employee Ownership Holding Co. with an estimated value of $4 million for the benefit of the ESOP and its participants, the announcement said.

In 2008, the DoL sued the firm’s board of directors, ESOP trustees, attorney, certified public accountant, and valuation adviser, alleging that the defendants imprudently used ESOP assets to purchase company stock from President and Chief Executive Officer Clair R. Couturier Jr. at an inflated price, and engaged in transactions that caused millions of dollars of harm to the ESOP and its participants, while enriching themselves (see “CA Firm Charged with Misusing ESOP Assets”).

In addition to $26 million in cash, in exchange for the stock, Couturier received a $5.5 million property in Palm Desert, California, $2.7 million in cash to pay taxes on that property, a $200,000 car, and a country club membership.

Number of Millionaires Back on the Rise

After the financial crisis whittled down the number of millionaires in the U.S., the number is recovering.

According to Spectrem Group, the number of U.S. households with a net worth of $1 million or more grew 16% to 7.8 million in 2009, up from 6.7 million the year before. That upswing follows a sharp decline of 27% in 2008 (see “Number of Millionaires Declined Last Year”). The net worth figures don’t include primary residence.

Similarly, the number of ultra-high-net-worth households (those with a net worth of $5 million or more), advanced 17% to 980,000 in 2009. And the affluent population, or those with a net worth of $500,000 or more, grew by 12% in 2009 to 12.7 million.

“While still well short of its all-time high of 9.2 million in 2007, this year’s growth in the millionaire population is nevertheless welcome news for an economy still working to recover,” said George H. Walper, Jr., president of Spectrem Group, in a news release.

Spectrem’s “Affluent Market Insights 2010” is based on Spectrem Investor Research surveys of 3,000 affluent households conducted throughout 2009.

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