DoL Sues Trustee for Misuse of Plans’ Assets

November 29, 2010 ( - The U.S. Department of Labor has sued trustee Colette Mordo for alleged misuse of more than $4.6 million in plan assets of the Sadimara Knitwear Inc. and the Stallion Knits Ltd. defined benefit pension plans.

The suit, filed in the U.S. District Court for the Southern District of New York, alleges that Colette Mordo authorized the plans to make improper loans and transfers of plan assets over several years to parties in interest, including members of the Mordo family, and two other companies Mordo owned.  The loans and transfers from both plans amounted to more than $4.6 million.    

According to a news release, the lawsuit states that Colette Mordo, husband Matthew Mordo and son Alan Mordo were all participants in the plans, as were employees, officers and/or owners of the companies, which makes them parties in interest with respect to the plans.  Matthew and Alan Mordo are both deceased.  Colette Mordo also had ownership in two other companies, International Design Concepts LLC and Apparel Group International LLC, which are parties in interest because of her ownership.  

The suit alleges that, between 2002 and the present, plan trustees and fiduciaries, including Colette Mordo, excluded eligible employees from participation in the plans and/or otherwise interfered with eligible employees’ ability to accrue benefits under the plans.  In addition, the suit alleges that she allowed participants who received benefit distributions from the plans to be paid less than they were entitled to receive.  

The news release said the suit asks the court to order Colette Mordo to restore all losses incurred by the plans, plus lost opportunity costs that resulted from her improper actions, and to permanently bar her from serving as a fiduciary to any ERISA-covered plan in the future.  The suit also asks the court to appoint an independent fiduciary to administer these plans and to order the plans to offset any benefits owed to Colette Mordo against the amount she owes the plans.