DOL Seeks Independent Fiduciary for Abandoned Plan

The plan’s recordkeeper refused to make distributions after the former plan fiduciary changed each participant’s address to his own.

The U.S. Department of Labor (DOL) has filed a lawsuit seeking appointment of an independent fiduciary for the abandoned 401(k) plan of Ants Software Inc. in Dunwoody, Georgia.

According to the DOL, in February 2013, Ants Software Inc. ceased operations, and at the time, Rik Sanchez was fiduciary to the Ants Software Inc. 401(k) Plan. Sanchez informed the plan’s third-party administrator, Aspire Financial Services Inc. that the plan was being terminated and requested that Aspire make account distributions to the plan participants.

However, in May 2013, Sanchez used his plan administrative login information to access each plan participants’ profile information and changed each participant’s mailing address to be that of Ants and changed the plan’s new bank account to be an account controlled by Sanchez. Due to the changes to the plan participants’ account information, Aspire refused to proceed with distributing plan assets based on Sanchez’s account information changes.

Sanchez then requested Aspire to transfer plan management and the assets of the plan to a company named Renowned Holdings Inc., an entity controlled by Sanchez. Aspire again refused to proceed with distributing plan assets based on the requested transfer request instructions from Sanchez. Sanchez then stopped administering the plan, leaving plan participants unable to receive information about their plan funds and unable to gain access to their plan benefits.

As of August 2013, the plan had approximately 76 participants with assets totaling approximately $1,383,875.53.

The DOL is asking the court to order that the defendants in the case be enjoined from engaging in any further violations of the Employee Retirement Income Security Act (ERISA) and be permanently enjoined from serving as a fiduciary or employee of any employee benefit plan subject to ERISA. The department also seeks the appointment of an independent fiduciary at the defendants’ expense for the purpose of terminating the plan and distributing its assets to plan participants.

The lawsuit was filed in U.S. District Court for the Northern District of Georgia, 1:15-cv-02388-WSD.