Opinion
Civil Action File No. 10 Cui. 4640 (SHS).
June 22, 2010
Preliminary Injunction
Plaintiff HILDA L. SOLIS, Secretary of the United States Department of Labor ("the Secretary"), having applied for a Preliminary Injunction in this action, and the Court having considered the pleadings, Declarations, Exhibits, and witness testimony filed and presented and a fact hearing and legal argument having been hold on June 22, 2010, for the reasons set forth on the record today.
IT IS HEREBYORDERED THAT:
1. Any and all cash assets of the Welko Inc. Pension Plan (hereinafter the "Plan"), including but not limited to the entire net proceeds received by the Plan from the sale of the Plan's property located at 90 East End Avenue, Unit 2E, New York, New York, shall be deposited by the Clerk of this Court into the Registry of this Court and then, as soon as the business of his office allows, the Clerk shall deposit these funds into the interest-bearing Court Registry Investment System (C.R.I.S.) administered by the Clerk of the United States W District Court for the Southern District of Texas as Custodian, pursuant to Local Civil Rule 67.1, until such time as the Court orders the return of the funds to the Plan's account. The Clerk of this Court shall direct from the income on the investment a fee equal to ten percent (10%) of the income earned, but not exceeding the fee authorized by the Judicial Conference of the United States and set by the Director of the Administrative Office.
2. Defendants Samuel Kohl, Caren Kohl and Welko Inc. (collectively "Defendant Fiduciaries") are hereby preliminarily enjoined from exercising any authority or control over the assets or operations of the Plan, including but not limited to initiating or engaging in any litigation on behalf of the Plan, without prior notice to the Secretary and approval by the Court.
3. Defendant Fiduciaries are hereby preliminarily enjoined from obtaining or using any credit, credit cards or loan proceeds obtained on behalf of the Plan, or otherwise encumbering Plan assets in any way, including but not limited to initiating or engaging in any litigation on behalf of the Plan, without prior notice to the Secretary and approval by the Court.
4. The status quo of the Plan shall be maintained pending the instant litigation, with the exception of transactions taken upon prior notice to the Secretary and Court approval as described above.
5. This Court's Order is issued upon the Secretary's showing that there is a substantial likelihood that she will prevail on her claims that the Defendant Fiduciaries have failed to act for the exclusive purpose of providing benefits to participants and beneficiaries and defraying reasonable expenses, and have failed to exercise care, skill prudence, and diligence in their management of Plan assets, and have dissipated the assets of the Plan without reference to their solvency or ability to make benefit payments in violation of ERISA § 404(a)(1)(A), (B) and (D), 29 U.S.C. § 1104(a)(1)(A), (B) and (D). There is also a substantial likelihood that the Secretary will prevail on her claims that Defendant Fiduciaries caused the Plan to engage in transactions prohibited by ERISA with or for the benefit of fiduciaries, parties in interest, or parties whose interests are adverse to the Plan's, in violation of ERISA § 406(a)(1)(A), 406(a)(1)(B). § 406(a)(1)(D), § 406(b)(1), and § 406(b)(2), 29 U.S.C. § 1106(a)(1)(b), § 1106(a)(1)(d), § 1106(b)(1), and § 1106(b)(2). The public interest as shown by the Secretary also favors protecting the retirement security of the participants of the Plan through this action.
SO ORDERED.