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Labor Department Sues Former North Carolina Company over ERISA Benefits

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Fletcher, NCThe US Department of Labor recently filed a lawsuit against former Fletcher, North Carolina company Unicomp Inc., claiming it violated portions of the Employee Retirement Income Security Act (ERISA).

The Asheville Citizen-Times reports that the lawsuit was filed in the US District Court for the Northern District of Georgia, Atlanta Division.

The suit claims that the company and its chief executive officer (CEO), Stephen Hafer, violated ERISA when they withheld nearly $10,000 in employee contributions between May and December 2006.

According to the suit, the contributions were not returned to the employees, but were instead used by the company and CEO.

The news source reports that the Labor Department's Employee Benefits Security Administration (EBSA) also found that Unicomp had failed to reimburse its employees for Consolidated Omnibus Budget Reconciliation Act (COBRA) payments after the firm's health plan was canceled in April 2006.

In the lawsuit, the Labor Department is asking the court to give back all losses from the plans to employees, including compensation for lost opportunity and interest. The suit also seeks to defer all healthcare plan payments owed to the defendants to help recuperate losses suffered by employees, according to the news source.

"Employees acted in good faith when they contributed to their health plan and were deceived into believing that they had health coverage when none existed," said acting director of EBSA's Atlanta office Isabel Colon. "The Labor Department will not tolerate misuse of employees' funds by fiduciaries who fail to act in the best interests of plan participants."

Unicomp, which filed for bankruptcy in 2006, was incorporated in North Carolina but the case is going to federal court in Atlanta because that is where the company's former CEO currently lives, according to the news source.

Unicomp is not the only company facing a Labor Department lawsuit over allegations of ERISA violations, however, as the trustee of Ohio-based North Coast Wood Products is accused of illegally transferring assets in the plan to his son.

The News-Herald reports that the ERISA lawsuit was filed in the US District Court for the Northern District of Ohio in Cleveland. The suit claims that the trustee, Harry Fishleigh III, transferred more than $96,000 in assets to his son, Steven, from 2006 to 2009. The assets reportedly belonged to 11 participants in the plan.

"This case demonstrates a clear breach of fiduciary duty on the part of the trustee," said Paul C. Baumann, director of the Cincinnati Regional Office of the EBSA. "When plan fiduciaries fail to act in the best interest of plan participants, the Labor Department will hold them accountable."

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