Hilda Solis v. Sophisticated Technologies, Inc et al

Filing 36

CONSENT JUDGMENT by Judge Dale S. Fischer in favor of Hilda Solis against Moshe Klein Related to: Notice of Lodging, 34 . IT IS HEREBY ORDERED, ADJUDGED, and DECREED that: 1. Defendant Klein shall pay the Plan $48,857.78 in principal and lost o pportunity costs calculated through January 25, 2011. Defendant Klein shall be assessed an amount due under ERISA §502(1), 29 U.S.C. § 1132(1) in the amount of twenty percent of the applicable recovery amount, or $9,771.40. The partie s shall bear their own costs, expenses, and attorneys feesincurred in connection with any stage of this proceeding, including but notlimited to attorneys fees which may be available under the Equal Access to Justice Act, as amended. (See order for further details). ( MD JS-6. Case Terminated ) (shb)

1
2
3

JS-6

4
5
6

IN THE UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF CALIFORNIA

7
8
9 HILDA L. SOLIS, Secretary
of Labor, UNITED STATES
10 DEPARTMENT OF LABOR,
11
Plaintiff,
12
13
14
15
16
17
18
19

Case No. CV 10-8755 DSF (SSx)

CONSENT JUDGMENT & ORDER
BETWEEN THE SECRETARY OF
LABOR AND DEFENDANTS
v.
MOSHE KLEIN AND THE
SOPHTECH 401(k) PLAN
SOPHISTICATED TECHNOLOGIES,
RESOLVING REMAINING
INC, a corporation also doing business as CLAIMS
SOPHTECH; MOSHE KLEIN, an
individual; and the SOPHTECH 401(k)
PLAN, an employee pension benefit
plan,
Defendants.

20
21

Plaintiff HILDA L. SOLIS, Secretary of Labor, United States Department of

22
23

Labor ("Secretary") pursuant to her authority under §§ 502(a)(2) and (5) of the

24 Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C.
25

§§ 1132(a)(2) and (5), has filed a Complaint against Defendants Sophisticated

26
27 Technologies, Inc., a corporation also doing business as Sophtech (“Company”);
28
Page 1

1 Moshe Klein, an individual (“Klein”); and the Sophtech 401(k) Plan, an employee
2

pension benefit plan (“the Plan”).1

3
A.

4

The Secretary and Klein (collectively, “the parties”) admit that the

5 Court has jurisdiction over this action pursuant to ERISA § 502(e)(1), 29 U.S.C.
6

§ 1132(e)(1), and that venue lies in the United States District Court, Central

7
8

District of California, pursuant to ERISA § 502(e)(2), 29 U.S.C. § 1132(e)(2).

9
10

B.

On January 25, 2011, the parties signed a Partial Consent Judgment &

Order, which appears as docket entry number 32 in this action and which is fully

11
2
12 incorporated by reference and attached hereto. As explained at paragraph B of the

13 Partial Consent Judgment & Order, it resolved only the amount of liability, the
14

appointment of an Independent Fiduciary, and the payment pursuant to § 502 (l) of

15
16 ERISA, 29 U.S.C. § 1132(l). As further explained in the Partial Consent Judgment
17 & Order, it did not resolve the Secretary’s claims for injunctive relief as pled for in
18

the Complaint.

19
C.

20

The parties agree to the entry of this Consent Judgment & Order

21 Resolving Remaining Claims. The parties further agree that this Consent
22

Judgment & Order Resolving Remaining Claims shall fully settle all remaining

23
24 claims of the Secretary asserted in the Complaint.
25

D.

All parties expressly waive Findings of Fact and Conclusions of Law.

26
27

1

The Plan is named in the Secretary’s Complaint as a party necessary for complete
28 relief pursuant to Fed. R. Civ. P. 19(a).
Page 2

1 IT IS HEREBY ORDERED, ADJUDGED, and DECREED that:
2

1.

Defendant Klein is permanently enjoined and restrained from

3
4

violating the provisions of Title I of ERISA, 29 U.S.C. §§ 1001-1191c.

5
6

2.

Upon the Court’s appointment of an Independent Fiduciary through

entry of the Partial Consent Judgment & Order, Defendant Klein is removed as a

7
8

fiduciary to the Plan.

9
10

3.

With regard to the ERISA-covered Synthean 401(k) Plan, and any

other ERISA-covered Plan to which Defendant Klein is a fiduciary, other than the

11
12 Sophtech 401(k) Plan, Defendant Klein agrees to appoint a successor Independent
13 Fiduciary at his expense. Defendant Klein shall appoint such successor
14

Independent Fiduciary concurrent with execution of this Consent Judgment &

15
16 Order Resolving Remaining Claims and such appointment shall be in full force and
17 effect by February 29, 2012. The successor Independent Fiduciary shall have full
18

discretionary authority and control to administer and terminate the plans, as

19
20 appropriate. Upon appointment of such successor Independent Fiduciary, Klein
21 shall be removed as a fiduciary from the Synthean 401(k) Plan and any other
22

ERISA-covered Plan to which he is a fiduciary.

23
4.

24

Except as provided in Paragraph 3, Klein is hereby further

25 permanently enjoined and restrained from future service as a fiduciary of, or
26
service provider to, any ERISA-covered employee benefit plan.
27
28
2

The Court has not entered the Partial Consent Judgment.
Page 3

1
2

5.

The parties shall bear their own costs, expenses, and attorneys’ fees

incurred in connection with any stage of this proceeding, including but not

3
4

limited to attorneys’ fees which may be available under the Equal Access to Justice

5 Act, as amended.
6

6.

Defendant Klein expressly waives any and all claims of any nature

7
8
9
10

which he has or may have against the Secretary, the U.S. Department of Labor, or
any of its officers, agents, attorneys, employees or representatives, arising out of
or in connection with the allegations contained in the Complaint on file in this

11
12

action, any other proceedings or investigation incident thereto or based on the

13

Equal Access to Justice Act, as amended.

14

7.

Nothing in this Consent Judgment & Order Resolving Remaining

15
16 Claims is binding on any governmental agency other than the United States
17 Department of Labor, Employee Benefits Security Administration.
18

8.

This Court retains jurisdiction of this action for purposes of enforcing

19
20 compliance with the terms of this Consent Judgment & Order Resolving
21 Remaining Claims.
22

9.

By signing their names to this Consent Judgment & Order Resolving

23
24 Remaining Claims, the parties represent that they are informed and understand the
25 effect and purpose of this Consent Judgment & Order Resolving Remaining
26
Claims.
27
28
Page 4

10.

1
2

This Consent Judgment & Order Resolving Remaining Claims may be

executed in counterparts, each of which shall be deemed to be an original, but all

3
4

of which, taken together, shall constitute one and the same instrument.

5
6

The Court directs the entry of this Consent Judgment & Order Resolving
Remaining Claims as a final order.

7
8

IT IS SO ORDERED, ADJUDGED, and DECREED.

9
10

Dated: February 22, 2012

11
12

__________________________________
DALE S. FISCHER
United States District Judge

13
14

Entry of this Consent Judgment & Order Resolving Remaining Claims is

15 hereby consented to:
16
17
18

Dated:_________

M. PATRICIA SMITH
Solicitor of Labor

19

MARY K. ALEJANDRO
Acting Regional Solicitor

20

DANIELLE L. JABERG
Counsel for ERISA

21
22
23
24

By_______________________
Katherine M. Kasameyer
Trial Attorney
Attorneys for the Plaintiff

25
26 ///
27 ///
28
Page 5

1
2

Defendants consent to the entry of this Consent Judgment & Order
Resolving Remaining Claims.

3
4
5

Dated:___________

________________________
Michael Hurey, Esq
Counsel for Defendant Moshe Klein

Dated:___________

________________________
Moshe Klein
On his own behalf and as Fiduciary of the
Plan.

6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

Page 6

1
2
3
4
5

IN THE UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF CALIFORNIA

6
7

8 HILDA L. SOLIS, Secretary
9 of Labor, UNITED STATES
DEPARTMENT OF LABOR,
10
Plaintiff,
11
12

Case No. CV 10-8755 DSF (SSx)

PARTIAL CONSENT JUDGMENT
& ORDER BETWEEN THE
SECRETARY OF LABOR AND
DEFENDANTS MOSHE KLEIN
AND THE SOPHTECH 401(k) PLAN

v.

13
SOPHISTICATED TECHNOLOGIES,
14 INC, a corporation also doing business as
15 SOPHTECH; MOSHE KLEIN, an
individual; and the SOPHTECH 401(k)
16 PLAN, an employee pension benefit
17 plan,
18

Defendants.

19
20
21
22
23
24
25

Plaintiff HILDA L. SOLIS, Secretary of Labor, United States Department of
Labor ("Secretary") pursuant to her authority under §§ 502(a)(2) and (5) of the
Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C.
§§ 1132(a)(2) and (5), has filed a Complaint against Defendants Sophisticated
Technologies, Inc., a corporation also doing business as Sophtech (“Company”);

26
27
28
Page 1

1 Moshe Klein, an individual (“Klein”); and the Sophtech 401(K) Plan, an employee
2 pension benefit plan (“the Plan”).3
A.

3

The Secretary and Defendant Klein (collectively, “the parties”) admit

4 that the Court has jurisdiction over this action pursuant to ERISA § 502(e)(1), 29
5 U.S.C. § 1132(e)(1), and that venue lies in the United States District Court, Central
6 District of California pursuant to ERISA § 502(e)(2), 29 U.S.C. § 1132(e)(2).
B.

7

The parties agree to the entry of this Partial Consent Judgment &

8 Order. The parties further agree and understand that that this Partial Consent
9 Judgment & Order only resolves the amount of liability, the appointment of an
10 Independent Fiduciary, and the payment pursuant to § 502(l) of ERISA, 29 U.S.C.
11 § 1132(l). The parties further agree and understand the Secretary’s claims for
12 injunctive relief as pled for in the Complaint are unresolved, the Secretary intends
13 to continue to pursue those claims and relief, and Mr. Klein intends to defend the
14 claims for injunctive relief.
15 IT IS HEREBY ORDERED, ADJUDGED, and DECREED that:
1.

16

Defendant Klein shall pay the Plan $48,857.78 in principal and lost-

17 opportunity costs calculated through January 25, 2011, (“Amount Due”).
a.

18

Defendant Klein shall pay the Amount Due referred in

19 Paragraph 2 to the Independent Fiduciary appointed to the Plan by the Court
20 (“Independent Fiduciary”), referenced infra at Paragraph 3, two payments as
21 follows: $20,000 on or about January 25, 2012 and $28,857.78 on or before
22 February 3, 2012. The February 3, 2012 payment shall be made by certified or
23 cashier’s check.
24
25
26
27
28

1

The Plan is named in the Secretary’s Complaint as a party necessary for complete
relief pursuant to Fed. R. Civ. P. 19(a).
Page 2

b.

1

Immediately following each payment, the Independent

2 Fiduciary shall provide the Secretary with proof of same. Such proof shall include
3 a trust statement showing deposit has been made into the Plan’s trust account, or
4 other appropriate evidence that such payment has been made.
c.

5

Should Defendant Klein fail to timely comply with any

6 requirements set forth in this Paragraph, the remaining balance of the Amount Due
7 at the time of non-compliance shall become immediately due and payable. Interest
8 will continue to accrue on the Amount Due at the rate set forth in 26 U.S.C. §
9 6621.
10

2.

Upon the Court’s appointment of an Independent Fiduciary,

11 Defendant Klein is removed as a fiduciary to the Plan.
3.
Nicholas Saakvitne is appointed as the Independent Fiduciary to the
12
13 Plan with the following duties and responsibilities:
a.
The Independent Fiduciary shall collect, marshal, pay out and
14
15
16
17
18

administer all of the assets of the Plan and take further action with respect to the
Plan as appropriate, including terminating the Plan when all of its assets have been
distributed to all eligible participants and beneficiaries, and the filing of the Annual
Report Form 5500s;
b.

19
20
21
22
23
24
25
26
27
28

The Independent Fiduciary shall, pursuant to the procedures

outlined in the Employee Benefit Security Administration’s Field Bulletin 200402, exercise reasonable care and diligence to identify and locate each participant
and beneficiary of the Plan who is eligible to receive a distribution under the terms
of the Plan;
c.

The Independent Fiduciary shall have all the rights, duties,

discretion, and responsibilities of a trustee, fiduciary, and Plan Administrator under
ERISA;
d.

The Independent Fiduciary is authorized to delegate or assign

fiduciary duties as appropriate and allowed under the law and may retain such as
assistance as he may require, including attorneys, accountants, actuaries, and other
Page 3

1 service providers;
e.

2

The Independent Fiduciary shall bill Defendant Klein for his

3 reasonable fees and costs for serving as the Independent Fiduciary;
f.
The Independent Fiduciary shall have full access to all data,
4
5 information, and calculations in the possession of the Plan and under its control,
6 including information and records maintained by the custodial trustees or service
7 providers of the Plan;
g.
The Independent Fiduciary is authorized to give instructions
8
respecting the disposition of the assets of the Plan; and
9
h.
The termination of the Plan shall occur no later than April 30,
10
2012.
11
i.
No later than thirty days following termination of the Plan, the
12
Independent Fiduciary shall provide documentation of same to Plaintiff. Such
13
documentation must evidence that distributions were made to all remaining eligible
14
Plan participants.
15
4.
Defendant Klein is liable for paying all reasonable fees and costs of
16
the Independent Fiduciary within thirty days of receiving the bill for same by the
17 Independent Fiduciary; in no event may Plan assets be used to pay the fees and/or
18 costs of the Independent Fiduciary.
19
5.
Defendant Klein affirms he did not participate in the Plan and further
20 waives any interest he may have in any amounts restored to the Plan as a result of
21 this Complaint and Partial Consent Judgment & Order.
22

6.

The parties shall cooperate fully with the Independent

23 Fiduciary herein appointed by the Court by, among other things, providing
24 documents or information any party may have in his, her, or its, actual or
25 constructive possession which may be relevant to the Plan’s administration and
26 management.
7.
Should Defendant Klein change residences or telephone numbers
27
28 before the restoration of the Amount Due the Plan or the Plan’s termination,
Page 4

1 whichever comes later, Defendant Klein shall notify the Secretary in writing of the
2 updated address and/or telephone number within seven days of the change.
3

8.

Upon Defendant Klein’s payment of $48,857.78 to the Plan as

4 outlined supra, Defendant Klein shall be assessed an amount due under ERISA §
5 502(1), 29 U.S.C. § 1132(1) in the amount of twenty percent of the applicable
6 recovery amount, or $9,771.40.
7

9.

Defendant Klein agrees to waive the notice of assessment and service

8 requirement of 29 C.F.R. § 2570.83. Defendant Klein may not challenge the
9 applicable recovery amount for any reason but retains the right to challenge the
10 injunctive relief the Secretary seeks in this matter. By April 3, 2012, Defendant
11 Klein shall pay the amount in paragraph 9 to the U.S. Department of Labor, by
12 sending a certified or cashiers check payable to the United States Department of
13 Labor (please write EBSA Case No. 72-030850(48) on the check) to:
14
15

ERISA – Civil Penalties
P.O. Box 71360
Philadelphia, PA 19176-1360

16
17

10.

Wherever submission to the Secretary is required under the terms of

18 this Partial Consent Judgment, such submission shall be made to:
19
Regional Director
20
21
22
23

Employee Benefits Security Administration
U.S. Department of Labor
1055 East Colorado Blvd., Suite 200
Pasadena, CA 91106
11.

The parties shall bear their own costs, expenses, and attorneys’ fees

24 incurred in connection with any stage of this proceeding, including but not
25 limited to attorneys’ fees which may be available under the Equal Access to Justice
26 Act, as amended.
27
12. Defendant Klein expressly waives any and all claims of any nature
28

which he has or may have against the Secretary, the Department of Labor, or any
Page 5

1

of its officers, agents, attorneys, employees or representatives, arising out of or in

2

connection with the allegations contained in the Complaint on file in this action,

3

any other proceedings or investigation incident thereto or based on the Equal

4

Access to Justice Act, as amended.

5

13.

Nothing in this Partial Consent Judgment & Order is binding on any

6 governmental agency other than the United States Department of Labor, Employee
Benefits Security Administration.
7
14. This Court retains jurisdiction of this action for purposes of enforcing
8
compliance with the terms of this Partial Consent Judgment & Order.
9
15. By signing their names to this Partial Consent Judgment & Order, the
10
parties represent that they are informed and understand the effect and purpose of
11
this Partial Consent Judgment & Order.
12
16. By the entry of this Partial Consent Judgment & Order, the
13
Secretary’s right to pursue injunctive relief based on the claims alleged in the
14 Complaint are in no way prejudiced and Defendant Klein’s right to contest the
15 sought injunctive relief and assert any relevant defenses are preserved.
16
The Court directs the entry of this Partial Consent Judgment & Order as a
17 final order.
18

IT IS SO ORDERED, ADJUDGED, and DECREED.

19
20

Dated: February 22, 2012

__________________________________

21

DALE S. FISCHER

22

United States District Judge

23
24
25
26
27
28

Entry of this Partial Consent Judgment is hereby consented to:
Dated:_________

M. PATRICIA SMITH
Solicitor of Labor
MARY K. ALEJANDRO
Page 6

1

Acting Regional Solicitor

2

DANIELLE L. JABERG
Counsel for ERISA

3

5

By_______________________
Katherine M. Kasameyer
Trial Attorney

6

Attorneys for the Plaintiff

4

7

Defendants consent to the entry of this Partial Consent Judgment & Order.

8
9

Dated:___________

10

________________________
Michael Hurey, Esq.
Counsel for Defendant Moshe Klein

11
12
13
14

Dated:___________

________________________

15
16
17
18

Moshe Klein
On his own behalf and as Fiduciary of the
Plan.

19
20
21
22
23
24
25
26
27
28
Page 7