It Can't Happen To Me, Right?

Here's a recent press release from the Department of Labor website.  The president (and fiduciary) of a Michigan company, Dr. James Johnson, is being sued by the DoL for failing to remit employee contributions to the company's plan in a reasonable time frame. 

The fiduciary breaches occurred over an 18-month period beginning in 2003.  Notice that the fiduciary is being sued personally and the Department is seeking to recover lost opportunity costs owed to the participants and to require that Dr. Johnson make good any losses resulting from his fiduciary breaches.  Here's a link to information about ERISA's statute of limitations.

There are not too many additional details about the case so we don't know what the circumstances were or whether there was an attempt to conceal the breaches or misuse the assets for personal gain. Perhaps it simply came down to lack of attention to detail and an indifference about correcting the issue.  Regardless, the following quote by the DoL official should be a wake up call/warning to fiduciaries who don't take their role seriously:

“The Labor Department will aggressively pursue individuals who misuse plan assets and will be diligent in recovering losses owed to American workers."

If you don't think that there is a cost for poor fiduciary governance, just ask Dr. Johnson.