The U.S. Department of Labor is suing Bethesda, Md.-based Dynasty Construction Inc. and owner John J. Barrett III for breaking fiduciary duty regarding the company's 401(k) plan.
The suit documents state that more than $775,000 from the 401(k) plan were invested in a 2006 fraudulent scheme, which violates the Employee Retirement Income Security Act. The amount invested accounted for nearly all of the accounts' assets for 19 plan participants at the end of 2005.
The suit was brought on by an investigation by the department's Employee Benefits Security Administration and filed in the U.S. District Court for the District of Maryland. According to the suit, the defendants did not adequately or prudently research the credentials of the financial representative they retained. They also didn't properly analyze the investments trusted in the Transcontinental Airlines Employee Investment Savings Account, a fraudulent scheme organized by Louis Pearlman, who is serving 25 years in federal prison.
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