The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) has reached a settlement restoring an additional $3.47 million directly to AIT Laboratories Employee Stock Ownership Plan (ESOP), “for losses associated with the plan’s 2009 purchase of overpriced company stock.”
A federal order and judgement from the U.S. District Court for the Southern District of Indiana, Indianapolis, resolves the EBSA lawsuit alleging that the plan’s trustee, PBI Bank Inc., and AIT’s chief executive officer, Michael Evans, violated the Employee Retirement Income Security Act by knowingly overpaying for company stock with ESOP assets.
The alleged violations occurred when PBI authorized the plan’s purchase of AIT Holding Company Inc., stock from Evans and other AIT executives. EBSA says the purchase amount was “far higher than the stock’s fair market value.”
Combined with two other previous settlements of suits filed by the department, EBSA and its attorneys have recovered approximately $7.1 million in direct monetary relief for the AIT ESOP’s participants and beneficiaries.
“These settlements restore to workers the stake they have in the company’s success,” says Assistant Secretary of Labor for the Employee Benefits Security Administration Phyllis Borzi. “Too often, we see purchase price manipulation and other schemes that benefit corporate leadership at the expense of employees. This is unjust and unlawful under regulations which protect these investments for employees’ long-term future.”
In addition to direct monetary relief to the plan, the recent order with Evans and PBI directs AIT to issue additional AIT stock to the ESOP, worth approximately $300,000; grants the ESOP a $5.9 million interest in certain properties controlled by Evans; and requires Evans to forgive a portion of his loans to AIT, worth approximately $2.5 million to the ESOP, and to share with the ESOP a portion of any future sale of his AIT stock.
Investigators with the EBSA’s Cincinnati Regional Office conducted the probe that led to the suit. The department’s Office of the Solicitor in Chicago and Washington, D.C. litigated the case.
Additional information can be found at www.dol.gov/ebsa.