Explore General Ordered to Restore 401(k) Funds
Fresno, California-based Explore General Inc. and Jaime M. Gonzalez were ordered to restore $519,601 to the company’s 401(k) profit-sharing plan.
The suit alleged that the defendants failed to pay required fringe benefits to the plan and breached their fiduciary duties under the Employee Retirement Income Security Act (ERISA) by not administering the plan solely in the best interests of participants. At the time of the violations, Gonzalez was the owner and president of the company.
Chief Judge Anthony W. Ishii found that the now-defunct construction company was required to pay its workers an hourly prevailing wage rate, including a fringe benefit for each participant in the form of contributions to the retirement plan, when it was contracted to perform work on projects financed by government agencies. The company was paid in full by the agencies for its work, including fringe benefit amounts, and certified that it was sending the fringe benefits to the plan. However, the company failed to remit more than $300,000 to the plan, choosing instead to use the money for general operating expenses. In addition to that amount, the judge’s order requires the company to restore lost earnings to the plan.
“Retirement savings are a vital part of ensuring a steady income after we leave the workforce, which is a key reason that Congress chose to give them special protections,” said Phyllis C. Borzi, assistant secretary of labor for employee benefits security. “Unfortunately, the individuals entrusted with protecting this plan violated those safeguards.”
The case is Solis v. Explore General Inc. No. 1:10-cv-01157-AWI-JLT.