Last week, the U.S. Department of Labor (“DOL”) announced that it obtained a consent judgment requiring current NFL player Michael Vick (quarterback, Philadelphia Eagles) and a company he owned called MV7 LLC to repay at least $416,461.10 in restitution to a pension plan sponsored by the company, and ordered Vick to forfeit any rights to benefits from the plan. The judgment also permanently bars the defendants from serving in a fiduciary capacity to any plan governed by ERISA, requires them to pay all the expenses associated with the plan’s termination and appoints an independent fiduciary until the plan is terminated.
The company, which filed for Chapter 11 bankruptcy protection in July 2008, sponsored a defined benefit retirement plan for nine current and former employees. The DOL lawsuit alleged that Vick and others violated ERISA by making a series of prohibited transfers from the pension plan. Specifically, Vick allegedly violated his duties as a plan trustee by making a series of prohibited transfers for his own benefit by using plan assets to (1) help pay the criminal restitution imposed on him after his conviction for unlawful dog fighting and (2) his attorneys’ fees in his bankruptcy case.
In general, ERISA Section 406 (Prohibited Transactions) provides, among other things, that a plan fiduciary shall not cause the plan to engage in a transaction if he knows or should know that such transaction constitutes a direct or indirect transfer to a party in interest of any assets of the plan. By using plan assets for his own benefit, Vick violated his fiduciary duties pursuant to ERISA Section 404, which required him to discharge his duties with respect to the plan solely in the interest of participants and beneficiaries.