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Press Releases by Date | Press Releases by Company Name
Press Release Court Orders $5M to Be Restored to Employee Stock Ownership Plan |
Issued by Employee Benefits Security Administration [EBSA], U.S. Department of Labor Aug. 17, 2017 |
August 16, 2017 -- NEW YORK, NY – The U.S. Department of Labor has reached an agreement with the owner of a Manhattan laser surgery center to pay $5 million to its Employee Stock Ownership Plan (ESOP) to resolve violations of the Employee Retirement Income Security Act of 1974 (ERISA). The agreement was entered in a consent judgment by the U.S. District Court for the Southern District of New York. The action follows an investigation by the New York office of the Department’s Employee Benefits Security Administration (EBSA) that found Dr. Roy Geronemus – owner of the Laser and Skin Surgery Center of New York – had hired his accountant, Samuel Ginsberg, to serve as the plan’s trustee. Ginsberg then approved the transaction despite a valuation that omitted Geronemus’s actual compensation and corporate debt, in addition to other errors. As a result, the ESOP paid too much when it subsequently purchased some of Geronemus’s stock in his company for $24 million, in violation of ERISA. The violations led the Department to sue Geronemus and Ginsberg. “Accurate company valuations are critical when it comes to establishing an employee stock ownership plan. Too often, company owners seek to inflate the price to benefit themselves at the expense of workers,” said EBSA Regional Director Jonathan Kay, in New York. “This agreement upholds our findings that Geronemus violated his fiduciary duty to the plan and its participants when he caused the Laser and Skin Surgery Center of New York Employee Stock Ownership Plan to overpay for the shares,” said Regional Solicitor Jeffrey S. Rogoff, in New York. “It also serves notice to plan fiduciaries that their sole obligation is to protect the interest of the plan participants.” Under the terms of the July 25, 2017 consent order and judgment, Geronemus is required to make a cash payment of $5 million to the ESOP and pay a $500,000 penalty. He will also forgive past-due and future compensation that would otherwise be owed to him. In addition, Geronemus and Ginsberg are enjoined from serving as fiduciaries to any ERISA-covered plan. Additional details are in the complaint and consent order. The defendants neither admit nor deny the allegations in the U.S. Secretary of Labor’s complaint, and this agreement to settle the case is not to be deemed or considered an admission or denial of wrongdoing by the defendants. Attorneys Alexander M. Kondo, Michael R. Hartman, and Darren Cohen of the Department’s New York Regional Solicitor’s Office litigated the case for the Department. EBSA is one of several federal agencies responsible for administering provisions of the ERISA, which provides certain protections and guarantees for participants and beneficiaries in private-sector employee pension and welfare benefit plans. Employers and workers can reach EBSA’s New York office at 212-607-8600 or toll-free at 866-444-3272 for help with problems relating to private-sector retirement and health plans. Additional information can be found at www.dol.gov/ebsa. BL:hh |
Editor's note: This press release has been issued by the company named above, not BenefitsLink. Reliance on information in this press release might be prudent only after an independent review of its accuracy, completeness, efficacy, and timeliness. Reference to any specific commercial product, process, or service by trade name, trademark, service mark, manufacturer, or otherwise does not constitute or imply endorsement, recommendation, or favoring by BenefitsLink. |