By Amye Anderson
UCBJ Managing Editor
CROSSVILLE – The owner of a midstate eye care facility is responding to statements made by the US Dept. of Labor in a release distributed by the agency earlier this month.
In that release, the DOL states Eye Centers of Tennessee, LLC, its owner Dr. Larry Patterson, and office administrator Raymond Mays misused nearly $1M in funds designated for the employee pension plan.
Though he maintains he is currently limited on what information he can share, as the matter is not entirely closed, Patterson told the UCBJ that the funds were invested in a way to maximize the return on investment for his employees. He also told us he has contributed the majority of those funds in the plan and that both he and Mays have contributed, or own, approximately half of the plan funds.
In a formal statement provided by Patterson to the UCBJ in response to the DOL statement, the facility owner stresses the actions of both he and Mays were in the best interest of ECOTN employees.
“These investments mainly involved the buying and selling of real estate in areas where Eye Centers has offices,” the statement reads. “In an effort to maximize the return to plan participants, the plan utilized companies tied to Dr. Patterson and Mr. Mays at little or no cost.”
According to the DOL, Patterson and Mays allowed plan funds totaling nearly $1M to be distributed to a handful of property management companies tied to Mays and Patterson – including $344,225.39 moved to Park Street Properties, LLC, and more than $285,000 used to purchase a commercial property that would later become a workout facility owned by Mays’ wife.
“The Employee Retirement Income Security Act (ERISA) is a complex and highly technical act that regulates the operation of employee retirement plans,” the ECOTN response statement reads. “Certain transactions between a retirement plan and those participating in the plan or those related to participants in the plan are automatically prohibited unless an exemption is first obtained by from the government … Dr. Patterson and Mr. Mays were unaware of these restrictions and thus failed to seek the necessary exemptions.”
The decision to invest pension dollars in the real estate market, Patterson says, came just prior to the stock market collapse in the late 2000s.
“While these transactions did not comply with the requirements of ERISA (the Employee Retirement Income Security Act), and were therefore ‘prohibited transactions,’ it has always been the position of Dr. Patterson and Mr. Mays that the transactions did not cause a loss to the retirement plan,” the statement continues. “At trial, Dr. Patterson and Mr. Mays presented testimony and evidence that these transactions were in the best interest of the retirement plan and did not cause a loss.”
Mays was charged with and pleaded guilty to criminal charges stemming from the incorrect annual reports filed on behalf of the retirement plan. No criminal charges were filed against Patterson.
“Neither the civil or criminal investigations supported any allegation or accusation that either Dr. Patterson or Mr. Mays stole or embezzled money from the retirement plan,” according to the company’s formal release in response to the DOL report.
Patterson, who says he and his company have shelled out “hundreds of thousands of dollars” fighting the claims against them, tells the UCBJ that no employees have been fired nor have resigned as a result of the ongoing matter. Patterson says its business as usual at the ECOTN offices as the staff continues to see patients.