Jeffreys Seed sued by Labor Dept.
By Staff Reports
Published in News on December 27, 2011 1:50 PM
The defunct Jeffreys Seed Co., its president, Edward Taylor Jeffreys, and its corporate secretary, James T. Jeffreys III, are being sued by the U.S. Department of Labor to restore $20,324.08 in employee contributions to the company's employee pension and health plans that allegedly were commingled with company assets.
A court order is being sought requiring the defendants to restore all losses to the retirement plan, including interest or lost opportunity costs that occurred as a result of "breaches of fiduciary obligations." A fiduciary is a person who hold assets in trust for someone else.
The lawsuit, filed Dec. 2 in the federal N.C. Eastern District Court, asks that the individual retirement plan accounts of any defendant "be set off against the amount of losses, if the losses are not otherwise restored by the defendants." It also asks that the company and Edward Taylor Jeffreys restore all losses to the health plan participants, including interest or lost opportunity costs that occurred as a result of "breaches of fiduciary obligations."
Another court order being sought in the lawsuit would permanently bar the defendants from serving as fiduciaries of any employee benefit plan subject to the Employee Retirement Income Security Act (ERISA) and asks that an independent fiduciary or administrator be appointed to the retirement plan at the defendants' expense.
According to the Department of Labor, an investigation by the Employee Benefits Security Administration (EBSA) found that from January 2006 through January 2009 that the defendants withheld employee contributions to the company's profit sharing plan and trust, but failed to timely forward them to the retirement plan.
It also alleges that from March until September 2008, the defendants withheld $13,242.08 in employee contributions, but failed to segregate and forward the contributions from company assets to the plan in accordance with ERISA requirements. It further alleged that since the company closed in January 2009 that the defendants have failed to distribute the retirement plan's balance -- approximately $134,000 -- to its seven remaining participants.
The Jeffreys Seed Co. Group Health Plan was funded by monthly premiums consisting of employee and employer contributions, which were collected by the company and sent to Blue Cross Blue Shield.
The lawsuit alleges that from September through October 2008, Jeffreys Seed Co. and Edward Taylor Jeffreys withheld approximately $7,082 in employee premium contributions, but failed to segregate and forward the contributions from company assets to the health plan in accordance with ERISA.
It further alleges that in October 2008, Blue Cross Blue Shield informed the company and Edward Taylor Jeffreys that the health plan was being retroactively terminated, effective Aug. 31, 2008, because of the lack of premium payments for September and October 2008.
"Employees count on pensions and health benefits to provide security for themselves and their families," said Isabel Colon, EBSA's regional director in Atlanta. "The Labor Department is committed to holding fiduciaries of these plans accountable when they ignore the responsibility to act solely in the interest of plan participants."
This case was investigated by EBSA's Atlanta Regional Office. It is being litigated by the Labor Department's Regional Office of the Solicitor in Atlanta and was filed in the U.S. District Court for the Eastern District of North Carolina.
Employers and workers can contact EBSA at 404-302-3900 or toll-free at 866-444-3272 for help with problems relating to private sector retirement and health plans. For more information, visit www.dol.gov/ebsa.