The U.S. Department of Labor today obtained a preliminary injunction freezing the assets of third-party administrator Administrative Services of Texas, Inc. of Houston, its parent Administrator Services of North America and a former corporate executive to prevent further depletion of the assets of client welfare plans whose accounts were held by them.

The order also appoints Jack M. Webb as the independent fiduciary with authority to operate the plans.

The department also simultaneously filed a lawsuit against the company, its parent and former corporate executive Mark A. Strange. The defendants were alleged to have violated the Employee Retirement Income Security Act by using the assets of client plans for the benefit of Administrative Services of Texas and Strange.

According to the lawsuit, strange signed and authorized $1,027,188 through a series of transfers from plan trust accounts to corporate accounts between Oct. 29, 1998 and march 3, 1999. Approximately $305,220 was wired back into the trust accounts leaving a shortfall of $721,968.

The lawsuit also alleges that the defendants transferred approximately $508,400 of plan assets from refund payments from service providers and COBRA payments which were not properly forwarded to the plans' trust accounts, but were instead used to pay operating expenses of defendants ASONA and ASO Texas.

In addition, strange allegedly diverted some $332,700 in plan trust funds for his own personal expenses including down payment on a Jaguar, payment of a personal car note, payment on a $100,000 personal bank loan and American Express credit card charges.... (more)

To view the complete press release, visit www.dol.gov/dol/pwba/public/media/press/pr061199.htm