Missing 401(k) contributions: Company held in contempt, faces daily fine by court order

Word to the wise: Never try to duck out of obligations outlined in a consent decree. You won’t be able to hide for long.

That’s a lesson recently learned the hard way by a Baltimore company and its owner, Bryan Hill.

Here’s how the whole mess got started – and the latest development in the case.

Where’s the money? Missing 401(k) contributions come to light

A probe by the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) found Bicallis LLC and Hill:

• Failed to forward employees’ pay deductions for 401(k) plan contributions, and
• Did not collect matching and safe harbor contributions the company owed the plan from October 2017 through December 2019.

The DOL filed a lawsuit against Bicallis and Hill, alleging violations of the Employee Retirement Income Security Act of 1974 (ERISA). Specifically, Section 409 of ERISA  imposes personal liability on plan fiduciaries to “make good to [the] plan any losses to the plan resulting from a breach” of fiduciary.

In May 2022, the parties entered into a consent decree that:

• Outlined a repayment plan to restore the funds
• Removed Bicallis and Hill from their fiduciary positions with the plan
• Permanently barred Bicallis and Hill from serving in a fiduciary capacity for any plan covered by ERISA in the future, and
• Ordered Bicallis and Hill to pay for the cost of a court-appointed independent fiduciary to administer the plan and distribute benefits to its participants and beneficiaries.

DOL seeks court intervention

But the terms of the agreement were not followed, according to the EBSA. So the DOL turned to the court for help.

Late last month, a federal court in Maryland granted the DOL’s motion to hold Bicallis and Hill in contempt of court after they violated the court’s order by not complying with the agreement.

As part of its contempt finding, the court tacked on a civil penalty, ordering Bicallis and Hill to pay a fine of $100 per day until the amounts owed are paid in full.

“Complying with a court order is never voluntary,” EBSA Acting Regional Director in Philadelphia Norman Jackson said in a statement. “We are committed to protecting the integrity of employee benefit plans and making certain those who serve these plans meet their legal obligations, including safeguarding employees’ retirement assets.”

Info: Court Holds Company, Owner in Contempt for Failing to Comply With Order to Restore $153K to 401(k) Plan, 7/11/23.