BOSTON — The U.S. Department of Labor recovered $6.3 million for participants of an employee stock ownership plan at an Auburn company after finding that leaders and a trustee at the company manipulated the company share value.
The funds are part of a settlement agreement with leaders and a trustee of Maine Oxy-Acetylene Supply Company to resolve alleged violations of the Employee Retirement Income Security Act [ERISA], according to a release from the U.S. Department of Labor.
As part of the settlement, leaders and the trustee face a $630,000 fine and permanently refrain from acting in a fiduciary capacity with an ERISA-covered benefit plan. Maine Oxy-Acetylene Supply Company distributes industrial, medical, and specialty gasses and welding and cutting equipment, supplies, and accessories throughout New England.
The settlement was approved by the U.S. District Court for the District of Maine.
In 2020, the DOL sued Maine Oxy-Acetylene Supply Company president and CEO Daniel Guerin, company director Bryan Gentry, and trustee Carl Paine, alleging they breached their fiduciary duties by causing and permitting the company to buy back shares of the ESOP for less than fair market value when the plan was terminated in 2013, the DOL said in a release.
In April 2022, the suit was consolidated with a 2019 class action suit brought by ESOP participants.
According to the release, the DOL alleged Guerin and Gentry bought 51 percent of the company in September 2012 and hid the price from the trustee and participants under a nondisclosure agreement with the company's annual valuation appraiser.
The DOL said that, as a result of that and other flaws, Guerin, Gentry, and Paine caused the plan's shares to be valued at $135, or about 20 percent of the share prices — $655 — paid by Guerin and Gentry months earlier.
“Fiduciaries must act solely for the benefit of the plan participants, not themselves," Employee Benefits Security Administration Regional Director Carol Hamilton in Boston said. "Our investigation alleges that Maine Oxy and Daniel Guerin imposed a non-disclosure agreement on a valuation company to hide relevant information about the value of the employee stock purchase plan from the trustee. These actions shortchanged the plan participants and violated the Employee Retirement Income Security Act.”
For help with problems related to private sector retirement and health plans, employees and other plan sponsors, as well as workers and retirees, can call 888-444-3272.
