Compliance

Lumber Company Sued for Mismanagement of Plan Assets

June 6, 2014 (PLANSPONSOR.com) – The Department of Labor (DOL) has filed a lawsuit to recover 401(k) plan assets mismanaged by a lumber company in Kennett Square, Pennsylvania.

By Kevin McGuinness editors@plansponsor.com | June 06, 2014
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In the suit, Perez v. Danby (docket number: 2:14-cv-02920-JHS), filed in the U.S. District Court for the Eastern District of Pennsylvania, Danby Lumber and Millwork Co. Inc. is named as the sponsor and administrator of the Danby Lumber and Millwork Co. Inc. 401(k) profit sharing plan. Stephen Scott Danby, Jr. was the president and majority shareholder owner of the company, and also served as the trustee of the plan. In addition to serving as trustee, Danby also performed the duties of plan administration for the company.

The DOL alleges Danby and the company participated in and undertook action to conceal acts or omissions by each other that they knew to be violations of the Employee Retirement Income Security Act (ERISA). The suit also alleges that Danby and the company breached their fiduciary duties to the plan and its participants, failed to take reasonable efforts to remedy those breaches, and caused the plan to engage in transactions that violated ERISA.

An investigation by the DOL’s Employee Benefits Security Administration (EBSA) finds that although the company was named as the plan administrator, Danby made the decisions regarding plan administration and the disposition of the plan’s assets. As part of his plan administrative duties, he was responsible for making decisions concerning the remittance of employee elective contributions to the plan and was also responsible for making investment decisions for the plan. Based on his authority to exercise discretionary control over the administration and operation of the plan, Danby was considered a fiduciary to the plan.

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