Vermont Business Magazine recently reported that the DOL settled its ESOP litigation involving First Bankers Trust Services (FBTS) and the principals of a Vermont company, Sonnax Industries, the maker of automatic transmission parts. This suit arose out of a 2011 transaction in which Tommy Harmon, the company’s president and CEO, and Frederick Fritz, an influential board member, sold their shares in the company to the Sonnax ESOP. They hired FBTS to serve as independent fiduciary for the transaction. In 2016, the DOL filed a complaint alleging FBTS, Harmon, and Fritz caused the ESOP to overpay for the company stock by millions of dollars.

As the court’s Consent Order notes, the recent settlement was contingent on “certain events occurring in early 2018,” that is, the sale of Sonnax for more than $65 million to Marmon Holdings Inc., a subsidiary of Warren Buffett’s Berkshire Hathaway. The sale went through in late March. Under the settlement, FBTS must pay $225,000 to the Sonnax ESOP, as well as a $25,000 civil penalty. Harmon and Fritz shall pay $2 million to the ESOP and a civil penalty of $200,000. FBTS, Harmon, and Fritz “neither admit nor deny the allegations” in the DOL’s complaint.

FBTS was a defendant in several similar suits and, in late 2017, settled three of them with the DOL.