Alliance Home Healthcare has been ordered by a federal judge to repay a total of US$1,736,339 to its profit-sharing plan.
An investigation by the U.S. Department of Labor’s Employee Benefits Security Administration in Chicago found that the Illinois home healthcare provider, its president Dalisay Sulit and its secretary/treasurer Reginaldo Sulit improperly transferred and distributed more than US$1.6 million from the profit-sharing plan to themselves, the company and others.
The department filed a lawsuit in August 2015, asserting that these plan withdrawals were not in the best interests of the participants and beneficiaries of the employee benefits plan.
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It was determined that the US$1,601,908 in withdrawn plan assets were used for non-plan purposes, including directly benefitting the company. The judgment also requires the trustees to repay lost opportunity costs of US$134,431, bringing the total owed to US$1,736,339.
“This judgment is a victory for the participants in the company’s profit-sharing plan,” said Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi.
“Too often, we see employee benefit plan funds used illegally by company owners and management to prop up struggling companies. Employee benefit plans must be managed in the best interest of participants, bottom line.”
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The U.S. District Court for the Northern District of Illinois, Eastern Division in Chicago, also removed the defendants from their positions as fiduciaries to the plan, and permanently enjoined them from serving as fiduciaries or service providers to any plan covered by ERISA.
Alliance Home Healthcare established the plan on Jan. 1, 2000, to provide retirement benefits to eligible employees. As of Dec. 31, 2006 – the last year an annual report was filed – the plan had 127 participants and $1.6 million in assets.