Old Elmhurst Preschool Fails To Answer Feds: Judge

ELMHURST, IL – A federal judge last month issued a default judgment against a now-defunct Elmhurst preschool that the U.S. Labor Department accused of mishandling employee health insurance and retirement contributions.

On June 21, the Labor Department sought the default judgment because Elmhurst Academy of Early Learning, 212 W. Lake St., and its owner, Colleen Odegaard, failed to meet the deadline to respond to the lawsuit, which was filed in December.

Without a lawyer, Odegaard responded to the lawsuit in March. But as a corporation, Elmhurst Academy must be represented by an attorney, the Labor Department said. The rule even applies when the person seeking to represent the corporation is its president and major stockholder, the agency said.

Five days after the department's request, U.S. District Judge Steven Seeger granted it. The judge said the academy must file a motion if it seeks a hearing on the default judgment.

If Odegaarrd does not challenge the default, she could be on the hook for at least $29,000 in health insurance and pension payments.

In an email to Patch in April, Odegaard called the allegations that she mishandled health insurance and retirement contributions "100 percent false."

"The Simple IRA contributions were to be made to my personal account in Colleen Odegaard’s name," Odegaard said. "The school chose not to fund me personally. Nothing to do with employees."

The lawsuit repeatedly referred to "employees" in the plural form.

While the federal government asserted Odegaard failed to respond, she said the case had been "worked out" and "an explanation has been given."

Patch left a message for comment with Odegaard on Tuesday.

In its lawsuit, the Labor Department alleges the academy, which closed in 2021, failed to properly handle employees' health insurance and retirement contributions.

In July 2021, the academy's health insurer, Blue Cross Blue Shield of Illinois, canceled insurance coverage retroactively to May 2021 because of missed premium payments, the lawsuit said.

Despite the cancelation, the academy withheld more than $10,000 from employees' pay for insurance premiums and kept the money in its bank account, according to the lawsuit.

For certain payroll periods from 2016 to 2021, the preschool withheld $19,000 from employees' pay for contributions to their independent retirement accounts, but the academy never sent the money to the accounts, instead spending it on the preschool's operations, court documents state.

Under federal law, such contributions are supposed to be remitted to the plan soon after they are received.

From 2016 to 2021, the academy repeatedly failed to send tens of thousands of dollars in contributions to employees' retirement accounts in a timely manner, the lawsuit said.

The academy, which started in 1981, was at 212 W. Lake St.

In a 2021 interview, Odegaard said the school was suffering from staffing shortages and delayed payments from the state government.

Earlier this year, a new preschool called Fia Mia Academy opened in the building. Fia Mia said it has no affiliation with the previous ownership.