JOHNSTOWN – A defunct Meyersdale company has violated the Employee Retirement Income Security Act (ERISA), per an investigation conducted and subsequent complaint filed by the U.S. Department of Labor (DOL).

On Dec. 2, DOL Secretary of Labor Thomas Perez filed a complaint against Matthew Kenneth Smith, Wind Turbine Solutions and Wind Turbine Solutions Retirement Trust of Meyersdale and Morgantown, W.Va., alleging it “withheld approximately $78,000 from the employee participants’ wages and salary, which the employee participants specifically requested be transferred to the plan, failed to transfer a significant amount of the employees’ contributions to the plan, and failed to pay interest on the unremitted contributions.”

Wind Turbine Solutions ceased operation in April 2014 and is the subject of a bankruptcy court discharge order, as well.

The Trust was an employee benefit plan set up to provide “deferred compensation and retirement benefits for the company’s employee participants based on employee participants’ contributions and other matching contributions from the company.”

Smith created the Trust on Oct. 1, 2011, by signing a document entitled “Adoption Agreement For Non-Standardized 401(k) Profit Sharing Plan,” effective October 1, 2011 (the Adoption Agreement), which named Smith as the trustee with responsibility over the Trusts’ assets. The Adoption Agreement also named the Company as the Trust Administrator.

Smith also adopted a document entitled “Defined Contribution Prototype Plan and Trust” (the Trust Document), which governs the administration and management of the Trust and its assets.

“The primary purpose of the Trust is to provide deferred compensation and retirement benefits for employee participants based on employee participants’ contributions,” the complaint reads.

From 2011 until the company ceased operations in April 2014, the company and Smith served as plan fiduciaries responsible for making decisions concerning the remittance of elective contributions to the plan.

“For the years 2011 until the company ceased operations in April 2014, the company and Smith withheld approximately $78,000 from employee participants’ wages and salary, which the employee participants specifically requested be transferred to the Trust. For the years 2011 until the company ceased operations in April 2014, the company and Smith failed to transfer the entire amount of the employees’ contributions to the Trust,” the complaint continued.

The plaintiff says, “Smith failed to transfer the entire amount of the employee participants’ deferred compensation to the Trust or to MG Trust; rather, Smith knowingly appropriated employee participants’ deferred compensation for his own use and for the use of the company to cover operating costs and to meet his obligations to the company as a member.”

“The company knew that it had received Trust assets in the form of employee participants’ deferred compensation through the actions and knowledge of Smith, who as a member of the company acted on the company’s behalf in taking and appropriating employee contributions,” the complaint says.

According to the litigation neither Smith nor the company has transferred the missing employee participants’ deferred compensation to the Trust, to the present date.

The plaintiff is seeking the lawsuit to “require each of the fiduciary defendants, the company and Smith, to jointly restore all losses caused to the plan by their fiduciary breaches”, and further, to bar Smith from serving as a fiduciary to plans covered by ERISA in the future.

The plaintiff is represented by Geoffrey Forney of the U.S. Department of Labor’s Office of the Solicitor, in Philadelphia.

The defendants have not secured legal counsel yet, according to court records.

U.S. District Court for the Western District of Pennsylvania case 3:16-cv-00255

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nickpennrecord@gmail.com

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