The lawsuit further alleges that Bruce Hartmann and his father, Terry Hartmann, failed to remit in a timely manner over $1.5 million in 401(k) plan participant contributions and loan repayments, as well as $65,000 in contributions and loan repayments—funds which they instead for internal operations.
"As a result, despite the fact that $1.26 million in employee health plan contributions were withheld, $3 million in employee medical claims were not paid, in violation of the Employee Retirement Income Security Act (ERISA)," stated the Labor Department.
The lawsuit seeks to recover all losses, with interest, incurred by the employees who thought they were covered. It also seeks to permanently bar the trucking company's owners from entering into any health plan governed by ERISA.
"These defendants blatantly misused their employees' retirement and health benefit contributions for personal gain," said Phyllis C. Borzi, assistant secretary of the Labor Department's Employee Benefits Security Administration (EBSA). "Despite financial hardships, employers and plan officials are obligated to forward those employee contributions to the plans."
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Mid-States Express went bankrupt in March 2009. Approximately 650 employees were covered by the company's 401(k) plan.
Meanwhile, a different lawsuit filed by the US Department of Labor alleges that Raymond Woronowicz, former president of the Business Alliance Inc., failed to put employee contributions into the company's employee benefit plan. According to the lawsuit, elective contributions from employee participants were deducted from paychecks between September 2004 and January 2006 but were not deposited into the plan.
The lawsuit seeks to remove the defendant as a fiduciary and further seeks approximately $26,000 in plan assets.