LYNCHBURG, Va. (Legal Newsline) — The U.S. Department of Labor recently filed a lawsuit against the fiduciaries of a Virginia-based employee stock ownership plan for allegations of failing to protect the assets of the plan.

 

According to the department, Adam Vinoskey – owner of Sentry Equipment Erectors Inc. – sold $21 million in company shares to the company’s ESOP at an inflated rate in 2010. Vinoskey was also a trustee of the ESOP. Vinoskey’s alleged actions violated the Employee Retirement Income Security Act and caused a direct loss to the plan.

The sale also allegedly hurt plan participants who had already purchased Sentry stock, because the value of the stock declined due to the company’s substantially increased debt load.

 

“Employee ownership can be a powerful way to give workers a stake in the fortunes of a company but only when the interests of the plan are protected against the conflicts that can arise when a major shareholder seeks to sell,” said Phyllis C. Borzi, assistant secretary of labor for employee benefits security.

“When plan fiduciaries rely on unreliable valuations to buy company stock at inflated prices, they often cause serious harm and potentially threaten the long-term financial security of participants.”

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U.S. Department of Labor
200 Constitution Ave NW
Washington, DC - 20210

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