The U.S. Department of Labor’s Employee Benefits Security Administration has reached a settlement restoring an additional $3.47 million directly to AIT Laboratories Employee Stock Ownership Plan, for losses associated with the plan’s 2009 purchase of overpriced company stock.

The “Agreed Order and Judgment,” entered on May 25, 2016, in U.S. District Court, South District of Indiana, Indianapolis, resolves the department’s lawsuit alleging that the plan’s trustee, PBI Bank Inc., and AIT’s Chief Executive Officer, Dr. Michael A. Evans, violated the Employee Retirement Income Security Act. The alleged violations occurred when PBI authorized the plan’s purchase of AIT Holding Company Inc., stock from Evans and other AIT executives, for an amount far higher than the stock’s fair market value. 

Combined with two other previous settlements of suits filed by the department, EBSA and its attorneys have recovered approximately $7.1 million in direct monetary relief for the AIT ESOP’s participants and beneficiaries. 

AIT Holding Company Inc. is the plan administrator and plan sponsor of the ESOP. It is also the parent of American Institute of Toxicology, Inc., that does business as AIT Laboratories.

In September 2014, the department reached a settlement with AIT to pay $2.1 million to the ESOP. In October 2014, other AIT executives paid $1.5 million to the ESOP in a second settlement with the department.

In addition to direct monetary relief to the plan, the recent order with Evans and PBI does the following:

• Directs AIT to issue additional AIT stock to the ESOP, worth approximately $300,000.
• Grants the ESOP a $5.9 million interest in certain properties controlled by Evans.
• Requires Evans to forgive a portion of his loans to AIT, worth approximately $2.5 million to the ESOP, and to share with the ESOP a portion of any future sale of his AIT stock.

Taken together, these three settlements represent $7.1 million in direct monetary relief to the ESOP and promise the ESOP the majority of the benefit of any future sale of AIT. 

During the time of the alleged violations, PBI – a subsidiary of Porter Bancorp of Louisville, Kentucky – served as the plan’s trustee. In an earlier, separate action brought by the department, PBI agreed to be barred permanently from serving as a fiduciary or service provider to any ERISA-covered plans in the future, except in very limited circumstances.   

AIT Holding Company Inc. primarily provides pharmaceutical drug identification and quantification services for medical, clinical and forensic purposes. As of Dec. 31, 2014, the AIT Laboratories Employee Stock Ownership Plan had 218 participants.