A recent court ruling in Utah serves as a stark reminder of the severe penalties that await those who mishandle employee retirement funds. The U.S. Department of Labor (DOL) obtained a preliminary injunction against the CEO and co-owner of a construction company for misusing over $300,000 from the company’s employee stock ownership plan. This case underscores the importance of upholding fiduciary responsibilities and complying with employment laws, offering vital lessons for small and midsize business owners.

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CEO Removed as Trustee Amid Misuse Allegations

Judge Ted Stewart of the U.S. District Court for the District of Utah granted the DOL’s motion for a preliminary injunction on July 3, 2023. The court ordered the removal of the CEO as trustee of the construction company’s employee stock ownership plan. The investigation found that the CEO had improperly utilized employee retirement funds to cover the company’s business expenses. To safeguard employee contributions, the court also appointed an independent fiduciary to oversee the plan.

Safeguarding Employee Retirement Funds

Klaus Placke, Regional Director of the Employee Benefits Security Administration, emphasized the importance of this action: “The removal of [the CEO] is a necessary first step to make certain the retirement funds of the construction company’s employees are managed in their best interests.” Protecting employees’ hard-earned retirement savings is of paramount importance, highlighting the fiduciary duty that businesses bear towards their workforce.

Misuse and Violations Uncovered

During the investigation, the Employee Benefits Security Administration discovered that the CEO had withdrawn over $300,000 from employees’ retirement funds in 2021 and 2022 to cover business expenses. Additionally, he failed to pay over $30,000 to a beneficiary who had requested a distribution. These actions directly violated the Employee Retirement Income Security Act, which is in place to safeguard employees’ retirement savings. As a response to ongoing concerns, the DOL took swift action to prevent further misuse.

DOL’s Commitment to Restoring Justice

Marc Pilotin, Regional Solicitor for the DOL, emphasized the importance of protecting workers’ savings: “When those entrusted with handling workers’ savings decide to loot workers’ money for their own purposes, as was the case here, the U.S. Department of Labor will take swift action to remove them from their roles and work aggressively to ensure the stolen funds are restored.” This proactive stance demonstrates the government’s commitment to holding accountable those who violate the trust placed in them.

A Lesson for All Business Owners

The case of the construction company is a lesson that resonates across all industries. Business owners, regardless of the size of their operations, must adhere to strict fiduciary responsibilities when managing employee retirement funds. Ignoring these responsibilities not only jeopardizes employees’ financial futures but can also result in severe legal and financial consequences for the business and its leadership.


The case of the CEO and construction company underscores the imperative of acting responsibly when entrusted with the retirement savings of employees. As a business owner, safeguarding these funds is not only a legal obligation but a moral duty.

By upholding fiduciary responsibilities and ensuring compliance with employment laws, you not only protect your employees’ futures but also maintain the integrity and reputation of your business. A commitment to ethical and responsible financial management is essential for the long-term success of both your employees and your business venture.

Asure’s HR experts help business owners comply with federal, state, and local employment laws. Learn how to protect your business here.

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