The AIT Laboratories Employee Stock Ownership Plan stands to recover an additional $3.47 million in a settlement reached between the Department of Labor’s Employee Benefits Security Administration and the plan’s trustee, PBI Bank Inc., and Michael Evans, chief executive officer of AIT Laboratories.

The settlement comes on the heels of two others that, together with the latest agreement, total approximately $7.1 million.

On Aug. 29, 2014, the Employee Benefits Security Administration filed suit in the U.S. District Court for the Southern District of Indiana in Indianapolis against Louisville, Ky.-based PBI and Evans for Employee Retirement Income Security Act violations “in connection with the purchase by the (employee stock ownership plan) of stock of AIT Holding Company … from Evans and others,” the order says.

AIT Holding Co. Inc., which primarily provides pharmaceutical drug identification and quantification services for medical, clinical and forensic purposes, is the plan administrator and plan sponsor of the employee stock ownership plan (ESOP). It is also the parent of Indianapolis-based American Institute of Toxicology Inc., which does business as AIT Laboratories. As of Dec. 31, 2014, the AIT Laboratories Employee Stock Ownership Plan had 218 participants.

The violations occurred when PBI authorized the plan’s purchase of AIT Holding Co. Inc., stock from Evans and other AIT executives, for an amount far higher than the stock’s fair market value.

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, this latest order directs AIT to issue additional AIT stock to the ESOP, worth approximately $300,000. It also 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.

Read: EBSA restored nearly $700 million in plan funds during FY 2015

During the time of the alleged violations, PBI, a subsidiary of Porter Bancorp of Louisville, Ky., 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.

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Labor Department wins another settlement on ESOP valuations

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