Thomas E. Perez, Secretary of Labor, United States Department of Labor v. Gruber Systems Inc., Gruber Systems Inc., Employee Stock Ownership Plan, John Hoskinson
Published: Feb. 20, 2016 | Result Date: Feb. 1, 2016 | Filing Date: Jan. 1, 1900 |Case number: 2:15-cv-04050-SVW-AS Settlement – $1,100,000
Court
USDC Central
Attorneys
Plaintiff
Andrew J. Schultz
(U.S. Dept. of Labor)
Janet M. Herold
(U.S. Dept. of Labor)
Defendant
Daniel P. Wierzba
(Seyfarth Shaw LLP)
Facts
Secretary of Labor Thomas Perez filed a complaint against Gruber Systems Inc., Gruber Systems Inc. Employee Stock Ownership Plan, and John Hoskinson for alleged violations of the Employee Retirement Income Security Act of 1974.
Contentions
COMPLAINANT'S CONTENTIONS:
Respondents allegedly caused the company's ESOP to purchase company stock at inflated prices, resulting in losses to ESOP participants. Respondents allegedly did so to bail out the financially distressed company, contrary to their duty as fiduciaries. Complainant filed this instant action asserting ERISA violations.
Result
The parties agreed to enter in to a Consent Judgment whereby judgment was entered against Gruber and Hoskinson in the amount of $1.1 million. Hoskinson was also removed as fiduciary of the ESOP and permanently enjoined from serving as such. The settlement fund would be used to restore the losses.
Other Information
FILING DATE: May 29, 2015.
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