West Virginia Adviser Barred from ERISA Work

An investment adviser from Charleston, West Virginia accused of misusing $600,000 from a 401(k) plan he trusteed has agreed that he will no longer work with Employee Retirement Income Security Act (ERISA) plans.

Chief U.S. District Judge Joseph R. Goodwin of the U.S. District Court for the Southern District of West Virginia approved a consent order with Knox Fuqua, the owner of the Charleston investment firm KHF Advisors LLC settling the matter. According to a U.S. Department of Labor (DoL) news release, Goodwin’s order provides that KHF won’t serve in a fiduciary capacity or as a consultant for compensation to any ERISA plan.

Fuqua worked with the Community Health Systems 401(k) Plan, sponsored by a Beckley, West Virginia health care provider, according to court documents.

He was accused of using plan assets to acquire certificates of deposit in June 2005 in the name of his private investment fund, the Fixed Income Fund. He then used the CDs as security for a loan from the bank to the Fixed Income Fund, the DoL alleged.

After Fuqua didn’t pay his interest due on the loan, the bank threatened to liquidate the CDs as payment for the loan. The DoL also alleged the bank participated in the improper actions of Fuqua because it knew that the assets in the plan account belonged to the 401(k) plan.

In 2006, the DoL a temporary restraining court order requiring that two certificates of deposit representing the plan assets be held until the case was resolved.

“Our legal action bars this defendant from holding a position of authority that presents an opportunity to misuse the assets of employee benefit plans in the future,’ said Mabel Capolongo, director of the Philadelphia Regional Office of the Employee Benefits Security Administration (EBSA).

Goodwin’s order in Chao v. Fuqua Civil Action No. 2:06-cv-0137 is here.