Fact Sheet 

U.S. Department of Labor 

Employee Benefits Security Administration 

November 2010 

Retirement Security Initiatives 

The Labor Department's Employee Benefits Security Administration (EBSA) is committed to safeguarding 

employee contributions to 401(k) plans and health care plans by investigating situations in which employers 

improperly delay forwarding employee contributions to the appropriate funding vehicle or simply convert the 

contributions to other non-plan uses. Either or both scenarios may occur when the employer is having financial 

problems and turns to the plan as a source of financing. 

Background 

 In 2007, almost 80 percent of families participating in an employment-based retirement plan 

participated in a 401(k) type pension plan. 

 The number of 401(k) plans has grown continually from over 17,000 plans covering 

approximately 7.5 million active participants in 1984 to an estimated 491,000 plans covering 

almost 60 million active participants, as of 2007. 

 Assets in 401(k) type plans were approximately $3 trillion in 2007. 

 The Labor Department’s national enforcement project reduces misuse of contributions made 

by workers to their 401(k) plans. 

 The initiative is multi-faceted, including: conducting investigations into 401(k) misuse; issuing 

a regulation to shorten the time for transmitting contributions to a 401(k) plan; and launching 

an education campaign to inform retirement plan participants about their rights and ways to 

protect their pension. 

401(k) Enforcement Initiative Results 

 In fiscal year 2009, a total of 1,042 civil investigations were closed – 910 with corrected 

violations. 

 The Labor Department had monetary results of $17,926,625 nationwide through fiscal year 

2009 under this project. 

 For fiscal year 2008, 1,271 civil and criminal investigations were closed – 1,103 with corrected 

violations. 
401(k) Initiative Cumulative Statistics 

(as of 09/30/09) 

Fiscal 

Year

Civil Cases 

Closed 

Civil Cases 

Closed With 

Violations 

Criminal Cases

Closed 

Criminal 

Indictments 

Monetary 

Results 

1995* 95 34 5 7 $1,320,308 

1996 458 146 8 14 $8,039,957 

1997 823 388 10 21 $28,176,814

1998 824 461 30 16 $13,989,075 

1999 852 625 23 17 $19,366,568 

2000 1,025 840 27 21 $27,882,270 

2001 1,150 893 23 8 $28,828,131 

2002 1,317 1,045 20 15 $42,833,078 

2003 1,364 1,157 20 8 $135,528,157

2004 1,591 1,269 21 10 $31,636,501 

2005 1,480 1,280 35 18 $42,808,668 

2006 1,306 1,122 29 17 $36,566,477 

2007 1,298 1,107 28 24 $51,294,250 

2008 1,232 1,072 39 17 $24,863,198 

2009 1,042 910 64 33 $17,926,625 

*The first year that EBSA began to emphasize 401(k) abuse as a national enforcement initiative. 

EBSA Enforcement Efforts 

Civil 

On January 14, 2009, in Chao v. Craig Wagner, the U.S. Department of Labor obtained a default 

judgment ordering Concrete Construction Co. of Acworth, Georgia, and its president, Craig Wagner, 

to restore $11,672 in employee contributions, employer contributions, and interest to the company’s 

401(k) plan. The Department alleged that the defendants violated the Employee Retirement Income 

Security Act (ERISA) when they withheld employee contributions to the plan and illegally 

commingled the contributions with the general assets of the company between March and August 

2003, and failed to remit matching employer contributions to the plan from March to December 

2003. The order also appoints an independent fiduciary to oversee the plan, removes the defendants as 

plan fiduciaries, and bars them from serving as fiduciaries of any employee benefit plan covered by 

ERISA. 

On February 12, 2009, in Chao v. Gene Shawn Group, et.al., the U.S. Department of Labor obtained 

a Consent Judgment and Order. The Consent Judgment requires defendants Young Jin Lee and 

Juliette Lee, owners of the Gene Shawn Group, LLC dba A-Q Dental Laboratory (Company), to 
repay $32,587, including interest, to the A-Q Dental Laboratory 401(k) Profit Sharing Plan. The 

Consent Judgment holds the Lees responsible for restoring any losses remaining after the conclusion 

of the Company’s bankruptcy proceedings. Additionally, the Lees were permanently enjoined and 

restrained from future service as a fiduciary of, or service provider to, any ERISA-covered plan. The 

Department alleged that the defendants violated ERISA by failing to remit employee contributions, 

employer matching contributions and loan repayments to the plan. 

On March 11, 2009, in Chao v. Durkin, the U.S. Department of Labor obtained a default judgment 

ordering defendant Kevin Durkin to pay to the Atlantic Worldwide I Profit Sharing Plan $5,478, plus 

interest, which will accrue until paid. The Department alleged that plan fiduciary Durkin violated the 

Employee Retirement Income Security Act by failing to remit employee contributions withheld from 

employees’ paychecks. 

In Chao v. Triangle Laboratories, the U.S. Department of Labor obtained judgments ordering the 

restoration of $97,317 to the Triangle Laboratories Inc. Retirement Fund. On March 13, 2009, the 

Court ordered Joseph Morales to restore $54,317 to the plan. Settlements were reached with three 

additional defendants in October 2008. Donald Harvan agreed to restore $25,000 to the plan, and 

Debbie Monaghan and Craig Stoke agreed to restore $9,000 to the plan. In addition, all of the 

defendants were barred in the future from serving as fiduciaries to any employee benefit plan 

governed by ERISA. The Department also obtained a Consent Judgment against J. Ronald Hass 

barring him from serving as a fiduciary. The Department alleged that the defendants violated ERISA 

by failing to remit employee contributions and loan payments to the plan. 

On October 15, 2009, in Chao v. Feige, the U.S. Department of Labor obtained a Consent Judgment 

requiring Robert Feige, plan trustee, to restore $25,284 to the 401(k) plan of the defunct Benes 

Communications, Inc. The judgment also orders Feige to distribute the Plan's assets to participants 

and terminate the plan, and permanently bars him from serving in a fiduciary capacity to any ERISAcovered plan in the future. The Department sued Robert Feige for allegedly violating ERISA. The 

Department alleged Feige violated ERISA by failing to forward employee salary deferrals to the plan 

and to take prudent steps to collect contributions owed to the plan. 

Subsequent to the Fact Sheet release: On September 21, 2010, in Solis v. Hardt, Donne, and Journey 

Electrical Technologies, the U.S. Department of Labor filed a civil complaint alleging that executives 

of a Laguna Hills, California company failed to collect more than $920,000 in employee and employer 

contributions in violation of the Employee Retirement Income Security Act. The executives were 

trustees of the company’s 401(k) plan, which covered approximately 264 employees. 

Criminal 

On September 3, 2009, Barry Stokes was sentenced to 151 months of imprisonment, to be followed 

by three years of supervised release. The court also ordered Stokes to pay restitution in the amount of 

$19,964,553.93. On September 9, 2008, Barry R. Stokes pled guilty to twenty nine counts of 

embezzlement from employee benefit plans, one count of mail fraud, two counts of wire fraud, six 

counts of money laundering and four counts of criminal contempt of court in U. S. District Court for 

the Middle District of Tennessee, Nashville Division. Stokes was president and CEO of 1 Point 

Solutions, LLC, a third party administration firm located in Dickson, Tennessee. 1 Point Solutions 

provided administration services to 401(k) plans as well as other employer sponsored employee 

benefit plans. As part of its services, 1 Point Solutions collected employee contributions for client 

plans which were meant to be invested in 401(k) accounts of plan participants. Instead, Stokes used 
the plans' funds for his personal and business purposes including his use of funds to purchase an 

extensive Japanese art collection. The total amount of the amount of funds Stokes embezzled 

exceeded $14 million. 

On July 22, 2009 Mark Harrington was sentenced to 2 years imprisonment, 24 months probation, and 

ordered to pay restitution of $349,870. On April 14, 2009, Mark Harrington pled guilty in the U.S. 

District Court for the District of Massachusetts to embezzlement from an employee pension fund. 

Mr. Harrington had been the Vice President and Controller at Anchor Capital Advisors, LLC and in 

this position he also acted as the Plan Administrator for the Anchor Employees' 401(k) Plan (Plan). As 

the Vice President and Controller, he was involved with the annual audit performed by the company's 

independent auditors, and he noted that those auditors never reviewed any of the retirement plan's 

records or activities which lead to his strategy for augmenting his income. As the Plan Administrator, 

he directed the custodians of the Plan's assets to make distributions totaling $386,711.70 to various 

fictitious entities. At the same time, he employed the services of a relative to establish bank accounts at 

different banks in the name of these fictitious entities and to deposit the distributions into those bank 

accounts. Harrington used the stolen funds to buy a home, a Cadillac Escalade, breast implants, 

jewelry and other items. 

On June 29, 2009, Danna Wachter was sentenced to 12 months imprisonment; 36 months supervised 

release and ordered to pay restitution of $36,880. On December 5, 2008 Wachter pled guilty to 

aggravated identity theft and embezzlement from an employee benefit plan. On June 25, 2008 an 

indictment was returned against Wachter in the U.S. District Court for the Western District of 

Missouri, Western Division. The indictment alleged that from November 2006 through July 2007, 

Wachter, a former table games dealer at a Kansas City casino, stole the identity of a co-worker in 

furtherance of a number of economic crimes that resulted in actual damages to the victim of over 

$38,000. Among the allegations, the indictment contended that in March 2007 Wachter used her coworker's Social Security Number and PIN to authorize an $18,000 distribution from her co-worker's 

401(k) account. Wachter is further alleged to have stolen the distribution check from the U.S. mails 

and to have forged the participant's signature on the check. 

On March 3, 2009, Marilyn K. Adams was sentenced in the U.S. District Court of Nebraska, to a 

prison term of 12 months, supervised release of 3 years, and ordered to pay restitution in the amount 

of $111,136.79. On April 23, 2009 Jeffrey Adams was sentenced to a prison term of 6 months and 

ordered to pay restitution in the amount of $111,136.79. The Adamses were indicted on April 22, 

2008 for embezzlement from the AMS 401k Plan (Plan) and for failing to file the Plan's annual Form 

5500. Marilyn K. Adams was President of AMS Healthcare Services, Inc. a Nebraska corporation 

providing medical staffing services and served as the Plan’s Trustee. Jeffrey L. Adams was the CEO of 

AMS which sponsored the AMS Healthcare Services 401k Plan. The 401k Plan was funded through 

voluntary contributions by employees of AMS Healthcare Services, Inc. which were intended to be 

forwarded to the Plan’s trust account. The Adamses embezzled $111,136 by withholding employee 

401k contributions from their employees' paychecks and using them for other purposes. In order to 

conceal the failure to forward the employee contributions to the Plan, the Adamses did not inform 

their employees about their failure to forward their contributions, and failed to provid the summary 

annual reports to participants, and file the required Form 5500 Annual Report with the Department of 

Labor. 

On June 23, 2008, Christian D. McIntire, owner of Atlantic Capital Management, Inc. (“Atlantic”) 

pled guilty in the United States District Court for the Western District of North Carolina Charlotte 
Division to a two count Information for embezzling assets of an employee benefit fund and failing to 

disclose on his 2001 Federal tax return approximately $60,850 in income. He was sentenced to 36 

months probation and ordered to pay restitution of $109,544. Atlantic was a third party administrator 

(“TPA”) to several employer sponsored 401(k) plans in the Charlotte, NC area. Atlantic collected 

contributions on behalf of the plans and would then forward them to American Funds. The plan 

contributions were then invested through American Funds. It was McIntire’s scheme, in part, to 

request distributions from plan participant accounts from American Funds without the knowledge of 

plan participants. American Funds would then issue checks in the name of plan participants and mail 

them to McIntire. McIntire would then deposit the checks into his or Atlantic’s account and use the 

funds for Atlantic’s or his own personal benefit. 

On July 17, 2008 David Jacobs was sentenced to 46 months imprisonment, three years of supervised 

released and ordered to pay court ordered restitution of $832,890 in United States District Court, 

Northern District of Illinois, Eastern Division. Jacobs had previously pled guilty to stealing funds 

from an employee benefit plan, in violation of 18 USC 664. Jacobs was the owner, operator and 

President of Northwestern Plating Works, Inc. (“NPW”), located in Chicago, Illinois. NPW was in 

the business of metal finishing. From September 2001, to March 2005, Jacobs withdrew money from 

the NPW Profit Sharing Plan (the Plan). In total, Jacobs wrote 49 checks from the Plan’s account at 

Morgan Stanley, totaling $832,890.84. The checks ranged in amounts from $5,000 to $60,000. The 

checks were first deposited into Jacobs’ personal bank account and then transferred to the NPW 

operating account. Jacobs was the sole trustee of the Plan. NPW went out of business in August 2005. 

On May 5, 2008, Ronald Dale Patterson, age 64, was sentenced to a 4-year deferred adjudication by 

the Harris County District Court in Texas. Patterson was previously indicted and on January 24, 

2008, entered a plea of no contest to one count of Misapplication of Fiduciary Property. Patterson was 

the President of Ronnie’s Food Markets and Trustee of the Ronnie’s Food Markets Profit Sharing 

Plan (the “Plan”). Between the period of January 10, 2002 and May 3, 2003, Patterson misapplied plan 

assets totaling $37,990.43 from the Plan’s bank account by writing checks to himself and paying 

personal expenses. 

On January 22, 2008, William B. Wofford was sentenced to 51 months imprisonment followed by36 

months probation and ordered to pay restitution of $277,938. On August 24, 2007, William B. 

Wofford, age 47, was convicted by a jury trial in the United States District Court, Northern District of 

Texas of 10 counts of Theft or Embezzlement from an Employee Benefit Plan. Wofford was the 

owner of Premier Consulting, Inc., (Premier) that sponsored the Premier Employers Group 401(k) 

Plan. Premier was a company that was in the business of leasing employees back to the companies for 

which the employees worked. Companies that hired Premier would no longer employ their own 

workers. Instead, Premier would employ the workers, and the clients of Premier would then lease the 

employees back from Premier. One of the benefits Premier offered was a 401(k) plan, known as the 

Premier Employer’s Group 401(k) Plan. From April 2002 through October 2004, Wofford directly 

and indirectly borrowed, withdrew and used, for his own use and benefit and for the use and benefit 

of companies and entities in which he had a financial interest, over $300,000 from the Plan. 

On November 16, 2007, Thomas E. Zimmer was sentenced in the United States District Court for 

the Northern District of Ohio, to 2 years of supervised probation, 6 months of home confinement 

and, fined $1,000 with a special assessment of $100. On October 3, 2007, Zimmer plead guilty to one 

count of theft or embezzlement from an employee benefit plan in violation of Title 18 USC 664. 

Zimmer was 60 % owner of Allied Construction Group, Inc. and plan administrator of the company's 
401(k) Plan covering employees of the Company. During the period May 3, 2002 - January 31, 2003 

Zimmer withheld $10,692 from the pay of employees as contributions to the Company 401(k) Plan, 

but, failed to remit these withholdings to the plan's custodian of assets. Instead, he deliberately chose 

to spend these funds held by the company for business or personal purposes. 

Participant Contribution Regulation 

The Department’s participant contribution regulation requires employers of all sizes to transmit 

employee contributions to pension plans as soon as they can be segregated, but in no case later than 

the 15th business day of the month immediately following the month in which the contribution is 

either withheld or received by the employer. The Department proposed an amendment to the 

participant contribution regulation to create a safe harbor rule under which participant contributions 

to small plans (with fewer than 100 participants) will be deemed to be made in compliance with the 

law if those amounts are deposited with small plans within seven business days of withholding or 

receipt. Pending the adoption of a final rule by the Department, EBSA will not assert a violation of 

ERISA regarding participant contributions where such contributions are deposited with a small plan 

within 7 business days. Because the final rule may change, periodically check www.dol.gov/ebsa for 

the publication of the final rule. 

Voluntary Fiduciary Correction Program 

EBSA adopted the Voluntary Fiduciary Correction Program (VFCP) to encourage employers and 

fiduciaries to comply with ERISA. This program allows plan officials to self correct certain violations 

and receive “no action” letters if they meet certain criteria. Most of the VFCP applications involve 

delinquent employee contributions. As VFCP applications continue to increase, fewer investigations 

involving these issues need to be conducted in order to correct violations. Since the VFCP was 

adopted on a permanent basis in March 2002, EBSA has received more than 5,300 applications and 

verified $439 million in corrections on behalf of plans and their participants. 

Consumer Education 

 The Department began a consumer education program simultaneously with its enforcement 

effort on employee contributions. 

 The “Top Ten Warning Signs” were published on EBSA’s Web site to provide consumers with 

tips on indicators of potential 401(k) abuse. 

 Several new publications were developed to assist individuals in learning about their rights and 

monitoring the safety of their retirement benefits. Some of the more popular include “What 

You Should Know About Your Retirement Plan” and “A Look at 401(k) Plan Fees”. 

 These publications are available on EBSA’s Web site at www.dol.gov/ebsa or through EBSA’s 

toll free number at 1-866-444-EBSA (3272). 

 If you have questions not answered in this fact sheet, contact EBSA through the toll-free 

number or electronically at www.askebsa.dol.gov. 

This fact sheet has been developed by the U.S. Department of Labor, Employee Benefits Security Administration, 

Washington, DC 20210. It will be made available in alternate formats upon request: Voice phone: 202-693-8664; TTY: 202-

501-3911. In addition, the information in this fact sheet constitutes a small entity compliance guide for purposes of the Small

Business Regulatory Enforcement Fairness Act of 1996.