Perez v. Byrnes et al
Filing
93
AMENDED CONSENT ORDER AND JUDGMENT: Granting the 92 Motion to Approve Amended Consent Order and Judgment. Signed by Senior Judge Frederick J. Scullin, Jr on August 14, 2023. (rep)
UNITED STATES DISTRICT COURT FOR
THE NORTHERN DISTRICT OF NEW YORK
-----------------------------------------------------------JULIE A. SU, 1 Acting Secretary of Labor,
:
United States Department of Labor,
:
Plaintiff,
:
v.
:
DANIEL M. BYRNES and the FORT
ORANGE CAPITAL MANAGEMENT INC.
:
PROFIT SHARING PLAN
:
Defendants,
------------------------------------------------------------0F
Civil File No. 1:15-cv-93(FJS/DJS)
AMENDED CONSENT
ORDER AND
JUDGMENT
Plaintiff Julie A. Su, Acting Secretary of Labor, United States Department of Labor (the
“Secretary”), and Defendant Daniel M. Byrnes agree to the entry of this Amended Consent Order
and Judgment as a complete resolution of the issues in contention between them in this matter.
The Secretary has filed his complaint and Defendant Byrnes answered and, after a decision on
summary judgment, Dkt. No. 48, on August 10, 2017 this Court issued a Judgment due to the Fort
Orange Capital Management Inc. Profit Sharing Plan (the “Plan”) in the amount of $310,000. Dkt.
No. 63. An offset of Defendant Byrnes’s participant interest in the assets of the Plan having been
applied and Defendant Byrnes having made $13,251.00 in total payments toward the Judgment,
the outstanding amount Defendant Byrnes owes on the Judgment is $293,989.21. On October 31,
2022, this Court entered a Consent Order and Judgment providing for Defendant Byrnes to make
monthly payments toward the Judgment. Dkt. No. 91. The parties wish to enter into this amended
consent judgment to modify the payment plan for Defendant Byrnes on the Judgment.
This action arises under Title I of the Employee Retirement Income Security Act of 1974
1
Pursuant to Rule 25(d) of the Federal Rules of Civil Procedure, Acting Secretary of Labor Julie
A. Su is automatically substituted as Plaintiff.
1
(“ERISA”), 29 U.S.C. § 1001 et seq., as amended, and was brought by the Secretary pursuant to
ERISA § 502(a)(2) and (5), 29 U.S.C. § 1132(a)(2) and (5), to obtain relief for breaches of
fiduciary duty under ERISA § 409, 29 U.S.C. § 1109, and to enjoin acts and practices which violate
the provisions of Title I of ERISA.
Pursuant to ERISA § 502(a)(2) and (5), 29 U.S.C. §
1132(a)(2) and (5), the Secretary has authority to enforce the provisions of Title I of ERISA by,
among other means, the filing and prosecution of claims against fiduciaries and other parties who
are in violation of ERISA.
The Plan is and was at all relevant times an employee pension benefit plan within the
meaning of ERISA § 3(2) and (3), 29 U.S.C. § 1002(2) and (3).
Daniel M. Byrnes was at all relevant times to this action a fiduciary of the Plan because he
exercised authority or control respecting the management or disposition of the assets of the Plan
within the meaning of ERISA § 3(21)(A), 29 U.S.C. § 1002(21)(A).
The Court has previously found that Defendant Byrnes violated ERISA §§ 404(a)(1)(A),
404(a)(1)(B) and 404(a)(1)(C). See Dkt. No. 48. The Secretary and Defendant Byrnes do now
consent to entry of an Amended Consent Order and Judgment by this Court.
The Secretary has agreed to the terms of payment contained in this Amended Consent
Judgment based on the sworn asset affidavit submitted by Defendant Byrnes on September 16,
2022 disclosing his financial condition, which shows that Defendant Byrnes is without sufficient
financial assets to make complete and immediate restitution to the Plan for the plan loss as a result
of the ERISA violations set forth above.
Upon consideration of the record herein, and as agreed to by the Secretary and Defendants,
the Court finds that it has jurisdiction to enter this Amended Consent Order and Judgment.
2
IT IS THEREFORE ORDERED that:
1.
Defendant Byrnes agrees to repay to the Plan the outstanding amount of the
Judgment less the participant interest that Defendant Byrnes has in the $310,000 due to the Plan
pursuant to the August 10, 2017 Judgment (the “Restitution Amount”). The Restitution Amount is
currently estimated to be $190,741.73. Defendant Byrnes shall make monthly payments to the Plan
for the pro rata benefit of all participants and beneficiaries, with the exception of Defendant
Byrnes, until the Restitution Amount has been paid in full, subject to the terms outlined below:
a.
Defendant Byrnes shall make monthly payments of $751 to the Plan toward
the Restitution Amount commencing on or before May 1, 2023 and continuing to
or before April 1, 2024.
b.
Beginning May 1, 2024, Defendant Byrnes shall make monthly payments
of 9.6% of one twelfth of his annual post-tax income for the preceding year. The
monthly payment amount shall be recalculated each year for the payments
beginning in May 1 of that year. The term “annual post-tax income” is defined as
follows:
i.
Daniel M. Byrnes’s taxable income, consisting of Defendant
Byrnes’s share of the taxable income shown on the equivalent of line 15 of
2022 Internal Revenue Service Form 1040 for the appropriate year. In
determining Defendant Byrnes’s share of that income, the following
specific calculations will be used, where applicable:
1. The portion of W-2 income which was required to be reported
in the manner of 2022 Internal Revenue Service Form 1040,
Item a, attributed to Defendant Byrnes (as opposed to his spouse,
3
if filing jointly), plus
2. The portion of 1099 income attributed to Defendant Byrnes (as
opposed to his spouse, if filing jointly), plus
3. All capital gains required to be reported in the manner of 2022
Internal Revenue Service Form 1040, Item 7 for accounts held
solely in Defendant Byrnes’s name and accounts held jointly by
Defendant Byrnes and any individual who is not his spouse, plus
4. All capital gains required to be reported in the manner of 2022
Internal Revenue Service Form 1040, Item 7, multiplied by the
percentage share of Defendant Byrnes’s W-2 and 1099 income
as compared to his total household W-2 and 1099 income for
accounts held jointly by Defendant Byrnes and his spouse, plus
5. All other income earned by Defendant Byrnes required to be
reported in the manner of 2022 Internal Revenue Service Form
1040, plus
6. All other joint income required to be reported in the manner of
2022 Internal Revenue Service Form 1040, multiplied by the
percentage share of Defendant Byrnes’s W-2 and 1099 income
as compared to his total household W-2 and 1099 income, less
7. The standard deduction or itemized deduction claimed, in the
manner of 2022 Internal Revenue Service Form 1040, Item 12,
multiplied by the percentage share of Defendant Byrnes’s
income as compared to his total household income if filing
4
jointly;
plus
ii.
Any income from sources which were required to be reported for
information purposes on 2022 Internal Revenue Service Form 1040, Items
2a and 3a, multiplied by the percentage share of Defendant Byrnes’s W-2
income as compared to his total household W-2 income for accounts if the
income was earned jointly with Defendant Byrnes’s spouse; plus
iii.
Any deduction for carryover losses from prior years, as set forth in
the equivalent of live 7 of 2022 Internal Revenue Service Form 1040 for the
appropriate year, multiplied by the percentage share of Defendant Byrnes’s
W-2 and 1099 income as compared to his total household W-2 and 1099
income; less
iv.
Daniel M. Byrnes’s total tax as calculated in the manner of Item 24
on 2022 Internal Revenue Service Form 1040, multiplied by the percentage
share of Defendant Byrnes’s taxable income as calculated in the manner
described in subparagraph 1.b.i above as compared to his household taxable
income if filing jointly, and Item 61 on 2022 New York State Department
of Taxation and Finance Form IT-201, multiplied by the percentage share
of Defendant Byrnes’s taxable income as calculated in the manner described
in subparagraph 1.b.i above as compared to his household taxable income
if filing jointly.
c.
Defendant Byrnes shall submit adequate documentation of his annual post-
tax income as defined above to determine the proper amount of payments due,
5
including annual income tax returns. This documentation shall be submitted not
later than Annual Federal Tax filing date of each year in which any payments are
due. Defendant Byrnes shall also cooperate in answering any questions regarding
the financial information that he submits to the Department of Labor and submitting
any additional financial information that the Department of Labor may request.
Defendant Byrnes shall submit the documentation described in this subparagraph
by email to riordan.brendan@dol.gov and to the following address:
U.S. Department of Labor
Employee Benefits Security Administration
Boston Regional Office, Attn: Regional Director
JFK Federal Building
15 New Sudbury Street, Room 575
Boston, MA 02203
d.
If Defendant Byrnes fails to submit this documentation by Annual Federal
Tax filing date of any year in which payments are due, a seven calendar-day grace
period shall be allowed for receipt of such documentation. In the event that the U.S.
Department of Labor does not receive the documentation by the eighth calendar
day after which it is due, the U.S. Department of Labor’s representatives will notify
Defendant Byrnes by email. Defendant Byrnes is responsible for timely notifying
the U.S. Department of Labor of any change in his email address. If the U.S.
Department of Labor does not receive the documentation within 10 days of
notifying Defendant Byrnes of the overdue documentation, then in the following
year Defendant Byrnes shall make monthly payments of the most recently
calculated monthly payment or $1,000, whichever is greater, toward the Restitution
Amount.
e.
Defendant Byrnes agrees that he will notify the U.S. Department of Labor
6
at the address in subparagraph 1c above if his average monthly expenses on an
annual basis fall below 70% of his annual post-tax income, as calculated on a 12month rolling basis ending April 30. Defendant Byrnes agrees that in such an event,
he will increase his monthly payment amount in an amount proportional to the
decrease in his monthly expenses, prorated based on the percentage of debt he owes
on the Restitution Amount compared to the debt he owes to other creditors, for the
following 12 months, and continuing each year should his monthly expenses remain
below 70% of his annual post-tax income, as described in this paragraph.
f.
Defendant Byrnes shall have the right to make greater payments toward the
balance of the money due without penalty.
g.
Upon any default, the Secretary shall have the right to accelerate full
payment of the Restitution Amount.
2.
Defendant Byrnes agrees that he will notify the U.S. Department of Labor at the
address in subparagraph 1c above within 15 days if he receives: (1) any bequest or inheritance
over $5,000; (2) lottery and gambling winnings over $5,000; (3) proceeds of any life insurance
policy over $5,000; or (4) any other windfall over $5,000 not reportable on IRS form W-2.
Defendant Byrnes agrees that upon receipt of any such enumerated monies he shall apply such
enumerated monies to any remaining payments owed on the Restitution Amount until such balance
has been paid in full.
3.
If the Independent Fiduciary is able to sell the Sarissa common shares held by the
Plan and the proceeds of the sale of all Sarissa stock held by the Plan exceed the Restitution
Amount, the below terms apply:
a.
All of the proceeds received by the Plan shall immediately be deposited into
7
the Plan and allocated on a pro rata basis for the benefit of all participants and
beneficiaries, including Defendant Byrnes.
b.
If the proceeds of the sale of all Sarissa stock held by the Plan exceed
$293,989.21, the Secretary agrees that the Judgment against Defendant Byrnes will
be considered to have been paid.
c.
If the proceeds of the sale of all Sarissa stock held by the Plan exceeds the
Restitution Amount, but does not exceed $293,989.21, Defendant Byrnes agrees to
apply his participant interest in his individual account balance in the Plan as an
offset against the remaining Judgment Amount due to the Plan. The Secretary
agrees that any participant interest that Defendant Byrnes has in such an offset shall
be credited to him and not offset from his account.
4.
If the Independent Fiduciary is able to sell the Sarissa common shares held by the
Plan and the proceeds of the sale of all Sarissa stock held by the Plan do not exceed the Restitution
Amount, the below terms apply:
a.
All of the proceeds received by the Plan shall immediately be deposited into
the Plan and allocated on a pro rata basis for the benefit of all participants and
beneficiaries with the exception of Defendant Byrnes.
b.
The Secretary agrees that the participant interest that Defendant Byrnes has
in the Judgment Amount shall be credited against such amount due, reducing that
amount accordingly.
c.
The proceeds from the sale shall be credited towards the Restitution
Amount. Defendant Byrnes shall be entitled to receive proceeds from any such sale
only after the Restitution Amount has been paid in full. If the Restitution Amount
8
has been paid in full, all proceeds from any such sale shall be allocated on a pro
rata basis for the benefit of all participants and beneficiaries, including Defendant
Byrnes.
5.
Defendant Byrnes shall have no rights nor claims to any monies deposited from any
source in the Plan unless and until the Restitution Amount is paid in full and allocated on a pro
rata basis to the accounts of the Plan participants and beneficiaries other than Defendant Byrnes,
or the requirements of paragraph 3 above are satisfied.
6.
If any of Defendant Byrnes’s contact information changes before the payment
requirements of paragraph 5 above are satisfied, he shall timely notify the U.S. Department of
Labor of his new contact information.
7.
The payment requirements of the Judgment in this matter will not be satisfied until
Defendant Byrnes deposits the total Restitution Amount or the requirements of paragraph 3 are
met.
8.
Each party agrees to bear his, her or its own attorneys’ fees, costs and other
expenses incurred by such party in connection with any stage of this proceeding to date, including,
but not limited to, attorneys’ fees which may be available under the Equal Access to Justice Act,
as amended.
9.
The parties agree that this document may be executed via counterpart or electronic
signatures and that a signature via facsimile or PDF and electronic mail will be deemed an original
signature and will be binding upon the party transmitting the signature by facsimile or PDF and
electronic mail.
10.
The Court directs the entry of this Amended Consent Order and Judgment as a final
order.
9
/s/ Amanda M. Wilmsen
August 14, 2023
8/9/23
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