DOL Resolves Case of Illegal Pension Transactions

July 24, 2013 ( – The U.S. Department of Labor (DOL) has obtained a judgment in federal court against a pension plan trustee who made illegal transactions.

The trustee of two defined benefit pension plans admitted to entering into $4,232,915 in alleged unlawful plan transactions between 2002 and 2010. Colette Mordo, the trustee and fiduciary to the pension plans of the New York City-based Sadimara Knitwear Inc. and the Stallion Knits Ltd., also agreed to restore, up to that amount, any shortfall in assets owed to the plan participants and beneficiaries.

This judgment resolves a lawsuit filed in the U.S. District Court for the Southern District of New York alleging that Mordo violated her fiduciary duties under the Employee Retirement Income Security Act (ERISA). The suit alleged that Mordo authorized the pension plans to make improper loans and transfers of plan assets over several years to multiple recipients, including members of the Mordo family and International Design Concepts LLC and Apparel Group International LLC, two companies in which Mordo had an ownership interest.

The judgment removed Mordo from any and all fiduciary positions with the plans and permanently bars her from serving as a fiduciary to any ERISA-covered plan. It also appointed an independent fiduciary who will administer the plans, determine and pay out benefits to participants, and then terminate the plans. The DOL is authorized to seek a contempt order should Mordo violate any terms of the judgment.

Sadimara Knitwear Inc. and Stallion Knits Ltd. were garment companies headquartered in New York, New York, which are no longer in operation.