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Acosta v. Demmy

United States District Court, S.D. Ohio

February 16, 2018

R. ALEXANDER ACOSTA[1] Secretary of Labor, United States Department of Labor, Plaintiff,
v.
AMY DEMMY, DEMMY SAND & GRAVEL, LLC, and the DEMMY SAND & GRAVEL, LLC RETIREMENT SAVINGS PLAN, Defendants.

          CONSENT ORDER AND JUDGMENT

         Plaintiff, R. Alexander Acosta, Secretary of Labor, United States Department of Labor ("the Secretary"), pursuant to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended, 29 U.S.C. §1001, et seq., filed a complaint against Defendants Amy Demmy, Demmy Sand & Gravel, LLC and the Demmy Sand & Gravel, LLC Retirement Savings Plan, ("Defendants") alleging breaches of fiduciary responsibilities under ERISA §§403(c)(1), 404(a)(1)(A) and (B), 406(a)(1)(D), and 406(b)(1) and (2), with respect to the Demmy Sand & Gravel, LLC Retirement Savings Plan ("the Plan"). The Plan was named as a defendant in the complaint pursuant to Rule 19(a) of the Federal Rules of Civil Procedure solely to assure complete relief could be granted.

         Defendants Amy Demmy ("Demmy"), Demmy Sand & Gravel, LLC ("the Company"), and the Plan, have answered the complaint and admit to the jurisdiction of this Court over them and the subject matter of this action.

         The plaintiff and defendants have agreed to resolve alt matters in controversy in this action between them (except for the imposition by Plaintiff of any penalty pursuant to ERISA §502(1), 29 U.S.C. §1132(1), and any proceedings related thereto) and said parties do now consent to entry of a Consent Order and Judgment by this Court in accordance therewith.

         Upon consideration of the record herein, and as agreed to by the parties, the Court finds that it has jurisdiction to enter this Consent Order and Judgment.

         IT IS THEREFORE ORDERED that:

         1. Defendants Demmy and the Company are permanently enjoined and restrained from violating the provisions of Title I of ERISA, 29 U.S.C. §1001 et seq.

         2. Defendants Demmy and the Company are jointly and severally liable to the Plan in the amount of $350, 234.99, a money judgment for which execution may issue and interest shall accrue at the Internal Revenue Code Section 6621 rate from January 31, 2018 forward. This sum represents employee contributions ($2, 409.65), loan repayments ($31, 256.87), and fringe benefits ($257, 496.56), not forwarded to the Plan, plus lost opportunity costs computed through January 31, 2018 ($59, 071.91). These amounts do not include monies owed to Defendant Demmy ($1, 626.47 in loan repayments and $7, 253.80 in fringe benefits).

         3. Defendant Demmy is owed $8, 880.27 as a result of her failure to forward employee contributions, loan repayments, and fringe benefits to the Plan. Defendant Demmy hereby waives the repayment of this sum to her individual Plan account as part of the resolution of this matter.

         4. Defendant Demmy shall pay $35, 292.99 to the Plan before February 15, 2018.

         5. Defendants Amy Demmy and the Company are specifically enjoined from withdrawing any funds from the Plan, including Defendant Demmy's participant balance.

         6. As of January 23, 2018, Defendant Demmy has a balance of $60, 489.85 in the Plan. Immediately upon the effectiveness of this paragraph of this Consent Order and Judgment, Defendant Demmy hereby authorizes the independent fiduciary (referred to in paragraph 12 below) to

a. withhold and remit to the Treasury Department (I.R.S.) 20% of her account balance,
b. cause her individual account balance in the Plan to be used to pay the fees of the Plan, including the fees of the independent fiduciary (see paragraphs 12) and 12k below), and
c. reallocate the remaining sum to the accounts of the participants and beneficiaries of the Plan on a pro rata basis using the per participant percentages contained in the attached Exhibit A, which is hereby incorporated into this Consent Order and Judgment, pursuant to Section 1502(a) of the Taxpayer Relief Act of 1997, codified at29U.S.C. §1056(d)(4).

         The Plan is hereby deemed amended to allow for such forfeiture of Defendant Demmy's individual Plan account.

         7. Defendant Demmy shall provide the Secretary with satisfactory proof of the payment described in paragraphs 4 above within five (5) calendar days following the payment. Proof shall be sent to the Regional Director of the Employee Benefits Security Administration, U.S. Department of Labor, 1885 Dixie Highway, Room 210, Fort Wright, KY 41011 ("Regional Director").

         8. The amount paid to the Plan (in paragraph 4 above) and the forfeiture (in paragraph 6c above) shall be credited to the $350, 234.99 judgment.

         9. Defendant Demmy has demonstrated a current inability to pay the remaining amount owed to the Plan. Her demonstration of current inability to pay includes her completion of an Affidavit of Financial Status executed under penalty of perjury and her 2010 through 2016 U.S. Tax Returns. Defendant Demmy agrees for the next 3 years to submit to the Regional Director her annual federal tax returns on or before 30 days after filing for each year, and, if she is not required by Federal law to file an annual federal tax return, she will provide a statement under oath that such filing is not required.

         10. Defendant Demmy agrees that 100% of any bequest, inheritance, gifts (over $5, 000), lottery and gambling winnings over $5, 000, or proceeds of any life insurance policy she may receive shall be restored to the Plan (up to the outstanding amount due the Plan after all payments and forfeitures have been made) within 30 days of receipt. In restoring the monies, Defendant Demmy shall send the monies directly to the Plan. If the Plan has been terminated by the time she makes further payments, Defendant Demmy shall make payments to the Plan's participants (listed on the attached Exhibit A) on a pro rata basis using the per participant percentages contained in the attached Exhibit A, which is hereby incorporated into this Consent Order and Judgment. Defendant Demmy shall provide the Secretary with satisfactory proof of the payments within five (5) calendar days following the payment. Proof shall be sent to the Regional Director.

         11. If it is found that the documents Defendant Amy Demmy provided regarding her financial status are untrue, the full amount of losses owed the Plan, plus accrued interest, shall immediately become due and payable together with post-judgment interest pursuant to 28 U, S. C. §1961.

         12. Defendants Demmy and the Company are removed as fiduciaries of the Plan. AMI Benefit Plan Administrators, Inc. located at 100 Terra Bella Drive, Youngstown, Ohio 44505 is appointed as the independent fiduciary of the Plan. The independent fiduciary shall have the following powers, duties and responsibilities:

a. The independent fiduciary shall have responsibility and authority for terminating the Plan. Such termination shall be made in accordance with the Plan's governing documents, the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. §1001 et seq., and the Internal Revenue Code ("IRC"). While not required to obtain a determination letter to terminate the Plan under ERISA or the IRC, the independent fiduciary shall make a determination as to whether it is prudent to go through the determination letter process for the Plan;
b. The independent fiduciary's responsibilities with respect to the termination of the Plan shall include, but not be limited to, liquidating the Plan's assets, communicating with participants regarding the termination of the Plan and their disbursal options, calculating the participant and beneficiaries account balances, and filing appropriate termination papers with the Internal Revenue Service and the Department of Labor. Allocation of monies collected shall be pro- rated according to Exhibit A attached to this Consent Order and Judgment;
c. The independent fiduciary shall have responsibility and authority to collect, liquidate, and manage such assets of the Plan for the benefit of the eligible participants and beneficiaries for the Plan who are entitled to receive such assets, until such time that the assets of the Plan are distributed to the eligible participants and beneficiaries of the Plan;
d. The independent fiduciary shall exercise reasonable care and diligence to identify and locate each participant and beneficiary of the Plan who is eligible to receive a payment under the terms of the Plan and to disburse to each such eligible ...

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