The DOL filed the lawsuit in December 2013 in the U.S. District Court for the Western District of Pennsylvania. The suit, Perez v. Kephart (docket number: 3:05-mc-02025), names David Kephart, Timothy Kephart, Kephart Trucking Co., and the Kephart Trucking Co. 401(k) plan as defendants.
The suit alleges that after establishing the Kephart Trucking Co. 401(k) plan in 1988 for its employees, the plan fiduciaries—David Kephart, Timothy Kephart and the company—violated their fiduciary duties under the Employee Retirement Income Security Act (ERISA).
The plan fiduciaries were responsible for making decisions concerning the remittance of elective contributions to the plan. However, investigators from the DOL’s Employee Benefits Security Administration (EBSA) found that from September 2011 to the present, the company deducted money from the participants’ pay as employee contributions and participant loan repayments. Certain employee deductions representing voluntary contributions and loan repayments for employees of the company, totaling approximately $270,000 plus interest, were not remitted.
The suit by the DOL seeks restitution to the plan of delinquent employee contributions and loan repayments, including lost opportunity costs. The DOL is also asking the court to appoint an independent fiduciary to administer or terminate the plan, and to offset any remaining individual account balances that David Kephart and Timothy Kephart have in the plan against the losses.
The DOL is also seeking an injunction from the court, which would bar the defendants from serving as fiduciaries to any ERISA-covered plans.
The full text of the DOL’s complaint document can be downloaded here.