The former head of now-defunct Gagne Precast Concrete Products in Veazie has agreed to pay $300,000 to settle a lawsuit with the U.S. Department of Labor. The DOL sued Stephen Thomas earlier this year for misusing employee ownership plan assets.
Thomas, the trustee of Gagne Precast's two defunct employee stock ownership plans, will restore $225,000 to the Gagne ESOP and $75,000 to the Frank L. Woodworth Inc. ESOP in Detroit, Maine, according to a press release from the DOL. The department in February filed the suit against Thomas after an investigation found he violated the Employee Retirement Income Security Act by misappropriating and/or improperly diverting plan assets. The DOL also alleged Thomas inflated the value of the company's stock and stole more than $1 million by authorizing inflated payments to other businesses he owned, withdrawing cash from Gagne's corporate accounts and using the payroll system to give himself an increased salary. Bangor Savings Bank seized the company's assets in 2008, after it defaulted on a $5.5 million line of credit used to refinance loans. Between 15 and 25 people lost their jobs, as well as the worth of their stock.
Thomas must also resign as a trustee of the ESOPs and pay costs associated with administering them. An independent fiduciary will handle the plans.