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
“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.
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.”