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Feds sue roofing company accused of diverting funds

The owners of a Grants Pass roofing company have been accused of illegally diverting $335,000 from a company employee retirement plan.

As a result of the diversion, two company employees have been denied disbursements from the plan, according to the U.S. Labor Department.

The federal agency is suing the company, Lawless Roofing, and its owners, Lewis and Donald Lawless, in U.S. District Court. The agency filed its complaint with the court Jan. 29 in Medford.

The company and its owners made the transfers in 2007 and 2008 from the Lawless Roofing Money Purchase Plan, according to a news release issued by the Labor Department on Tuesday.

"The complaint alleges that these activities violated the Employee Retirement Income Security Act, which prohibits employers from using the assets of their employees' retirement plans," the department stated.

The money was transferred to the company and then "imprudently invested" in loans secured by real estate and other property in which the retirement plan did not hold title, the agency alleges.

According to the complaint, 92 percent of the plan's assets were diverted, leaving behind insufficient amounts to pay benefits. Also, more than $6,400 of the plan's cash was used to pay the law firm representing the company in the agency's investigation.

The defendants made one repayment to the plan, in 2007, but $268,000 still is owed.

The agency is asking the court to order that the plan be made whole and that the defendants be enjoined from acting as fiduciaries of the plan. The department also asked that an independent fiduciary be appointed.

A person who answered the phone at Lawless' office in Grants Pass said the owners were out of the office and unavailable for comment.

Lawless Roofing, located at 501 Lawless Lane, off of Foothill Boulevard, bills itself as the oldest roofing company in Southern Oregon. It also fabricates sheet metal.

Lewis Lawless founded the company in 1951, and his son, Donald, joined the company in 1972, according to American Builders Quarterly, an industry publication. Lawless projects included Grants Pass High School when it was reconstructed in 1998.

Reach reporter Shaun Hall at 541-474-3813 or shall@thedailycourier.com