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.
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.