FROM: U.S. LABOR DEPARTMENT
US Labor Department recovers more than $4 million for employee stock ownership plan
Agreement benefits California cell phone retailer employees
SAN FRANCISCO — The U.S. Department of Labor today announced that it obtained a consent order requiring the fiduciaries of the Parrot Cellular Employee Stock Ownership Plan to pay $4,181,818 to the plan. The settlement resolves a suit filed in April 2012 after an investigation by the department's Employee Benefits Security Administration found violations of the Employee Retirement Income Security Act. The department alleged that plan fiduciaries caused or permitted the ESOP to purchase Parrot Cellular stock for more than fair market value.
The suit, filed in the U.S. District Court for the Northern District of California, named as defendants Dennis Webb, the principal owner of California-based Entrepreneurial Ventures Inc.; Matthew Fidiam and J. Robert Gallucci, EVI executives and ESOP trustees; and Consulting Fiduciaries Inc., an Illinois company that served as the independent fiduciary for the ESOP during a November 2002 stock purchase. EVI operates Parrot Cellular telephone retail stores and is the sponsor of the worker retirement plan.
"Employee stock ownership plans can have great benefits for workers, but only if they adhere to the laws that govern them," said Secretary of Labor Thomas E. Perez. "We are very pleased to have resolved this matter in a way that brings the plan into compliance with the law and benefits the plan's participants."
"Officials responsible for employee stock ownership plans are legally required to act prudently and solely in the interests of plan participants when purchasing or selling employer stock," said Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi. "This is true for all fiduciaries of all employee benefit plans covered by ERISA."
Under the terms of the settlement agreement, Consulting Fiduciaries agreed to pay $2 million to the ESOP to settle the allegations. Webb, Fidiam and Gallucci agreed to collectively pay $1.5 million to the ESOP, and Webb agreed to pay an additional $681,818 to the ESOP.
