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Chao v. USA Mining Inc.

March 20, 2007

ELAINE L. CHAO, SECRETARY OF LABOR, UNITED STATES DEPARTMENT OF LABOR PLAINTIFF,
v.
USA MINING INC., USA BULLION RESOURCES, INC., BUGSY MALONE'S SPEAKEASY, LLC, AND DAN GEIGER, AN INDIVIDUAL, DEFENDANTS.
PENSION BENEFIT GUARANTY CORPORATION, PLAINTIFF,
v.
USA MINING INC., USA BULLION RESOURCES, INC., BUGSY MALONE'S SPEAKEASY, LLC, AND DAN GEIGER, AN INDIVIDUAL, DEFENDANTS.



The opinion of the court was delivered by: Chief Judge Curtis L. Collier

JUDGMENT ORDER

The two above-captioned actions were commenced by the Plaintiffs, Elaine L. Chao, Secretary of Labor, United States Department of Labor ("Chao") and Pension Benefit Guaranty Corporation ("PBGC") (collectively "Plaintiffs") against Defendants USA Mining, Inc. ("USAM"), USA Bullion Resources, Inc. ("USAB"), Bugsy Malone's Speakeasy, LLC ("Bugsy's"), and Dan Geiger ("Geiger") (collectively "Defendants"). SCT Yarns, Inc. ("SCT") was a Delaware corporation with operations located in Chattanooga, Tennessee and Washington, Georgia (Court File No. 154). The SCT Yarns, Inc. Retirement Plan for Hourly Employees and the SCT Yarns, Inc. Retirement Plan for Salaried Employees ("the Plans") were employee benefit plans governed by the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. §§ 1001 et seq. ("ERISA") (Court File No. 154). These actions, which have been procedurally consolidated (Court File No. 34), were brought seeking damages for violations of ERISA (Court File No. 131).

On January 24, 2007, the Court issued an order and accompanying memorandum which DENIED Geiger's motion to dismiss and GRANTED IN PART and DENIED IN PART Plaintiffs' joint motion for summary judgment and RESERVED ruling on damages pending the submission of a revised damage calculation (Court File Nos.154 & 155). On February 7, 2007, Plaintiffs filed a notice of revised damage calculations (Court File No. 156). None of the Defendants filed a response or objections to this notice.

Based upon the filing of Plaintiffs' revised damage calculations (Court File No. 156), subject to the limitations described in the Court's previous order and memorandum (Court File Nos. 154 & 155)("January Order"), the Court GRANTS Plaintiffs' joint motion for summary judgment (Court File No. 129). Accordingly, judgment is GRANTED against the Defendants and Plaintiffs are entitled to recover damages from Defendants for all the transactions listed in Court File No. 156*fn1 as well as injunctive relief as more specifically described herein.

WHEREFORE it is hereby ORDERED, ADJUDGED, and DECREED that:

1. The Court has jurisdiction over the parties and the subject matter of this action and is empowered to provide the relief herein.

2. Defendants Geiger, USAM, and USAB are jointly and severally ordered to restore to PBGC, as statutory trustee of the Plans, all losses to the Plans including interest or lost opportunity costs, to disgorge all profits or financial benefits they realized to PBGC for the Plans as a result of the violations described in the January Order, and to correct all prohibited transactions.

3. Defendants Geiger, USAM, USAB, and Bugsy's are jointly and severally ordered to disgorge all profits or financial benefit they realized to PBGC, as statutory trustee of the Plans, as a result of their knowing participation in the violations described in the January Order.

4. The principal amount for which USAM, USAB, and Geiger are jointly and severally liable is $2,854,292, before interest. The principal amount for which Bugsy's is liable is $125,000, before interest. Collectively, these amounts are called the "Liability" in the subsequent paragraph.

5. Interest shall accrue on any unpaid portion of the Liability pursuant to the statutory U.S. Treasury underpayment rate set forth in Section 6621(a)(2) of the Internal Revenue Code, 26 U.S.C. § 6621(a)(2), compounded daily, through the January 24, 2007 entry of judgment. As of that date, USAM, USAB, and Geiger are jointly and severally liable for the amount of $4,775,130.13, including interest, and Bugsy's is liable for $192,777.59, including interest. From January 24, 2007, forward, the statutory rate for post-judgment interest pursuant to 28 U.S.C. § 1961 applies.

6. Any and all releases, contracts, and guaranties between and among the Plans and any and all of the Defendants are rescinded.

7. As to the injunctive relief requested:*fn2

A. Defendants are permanently enjoined and restrained from violating the provisions of Title I of ERISA.

B. Defendants are specifically and permanently enjoined from directly or indirectly engaging in ...


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