The U.S. Department of Labor has obtained a $4 million consent judgment against Harmon City Inc. and former trustees of the supermarket chain's profit-sharing plan.
The judgment is settlement of alleged violations of the Employee Retirement Income Security Act (ERISA) involving Harmon's retirement plan, which covered some 808 employees and had assets in 1985 of more than $8.5 million.The partial consent judgment stems from a civil complaint filed Aug. 22 by the Labor Department against Harmon's, former plan trustees Terry Harmon and F. Ray Green, and Midwest Realty and Finance Inc., which provided various services to the plan.
Among the allegations were charges that the former trustees, who were also officers and directors of the corporation, violated ERISA provisions by:
- "Causing the plan to make inadequately secured loans of more than $6 million to Midwest Realty at a time when Midwest's deteriorating financial condition made it a poor credit risk;
- "Accepting from Midwest Realty property in lieu of cash which was encumbered by liens and overvalued;
- "Making more than $1 million in loans to parties in interest, which loans were inadequately documented and secured by real estate located in a limited geographic area."
The defendants must pay to the plan $4 million in cash, promissory notes and stock of the company and the company must be independently valued by two appraisers before the stock transfer.
A final consent judgment will be entered at the time of the stock transfer.