Please note: As of January 20, 2021, information in some news releases may be out of date or not reflect current policies.
News Release
Former Trustees of Ridgefield, Connecticut Employer’s 401(k) Plan Agree to Restore Funds to Plan
Archived News Release — Caution: Information may be out of date.
Boston, Massachusetts - Three company officers of Pamby Motors, Inc., of Ridgefield, Connecticut, have agreed to restore nearly $53,000 to the company’s 401(k) plan as part of a consent judgment settling a U.S. Labor Department lawsuit.
The lawsuit, filed simultaneously with the consent judgment in the U.S. District Court for the District of Connecticut, alleged that Pamby Motors, Inc., and John Pambianchi, Michael Pambianchi, and Frederick Pambianchi, as fiduciaries of the 401(k) plan, violated the Employee Retirement Income Security Act. ERISA is the federal law that protects employee pension and welfare benefit plans, including 401(k) plans.
“Trustees of employee pension and benefit plans must realize that the law requires them to deal with plan assets in a careful and prudent manner,” said James Benages, regional director in Boston for the department’s Pension and Welfare Benefits Administration (PWBA). “They must scrutinize investments for the plan that could prove to be too risky.” Benages’ office investigated the case.
The suit alleged that at various times during 1999, the three individual defendants, then serving as trustees of the plan, permitted the securities broker for the plan to invest a total of $720,000 in plan assets in unsecured promissory notes with FON Digital Network, Inc., which later fell into default. The suit also alleged that the three caused $21,708 in surrender charges from a transaction that benefited only them to be inappropriately allocated to all plan participants.
The company served as the plan administrator, and was charged with failing to maintain a fidelity bond to insure against fraud and dishonesty by every person who handled the plan’s funds or property.
The consent judgment was signed by U.S. District Judge Christopher F. Droney on December 23. It prohibits the defendants from future violations of ERISA, requires the three individual defendants to reallocate from their own plan accounts a total of $52,997.38 for the benefit of the other participants and beneficiaries of the plan, and requires the company to obtain a proper fidelity bond to protect the plan. The three individuals are also prohibited from serving as fiduciaries to any ERISA-covered plan for ten years from the date of the judgment.
The recovery in this matter is in addition to $243,000 that the defendants restored to the Pamby Motors, Inc. 401(k) Plan in connection with a related, recently-settled private lawsuit brought by plan participants.
More information about the pension and benefit protections provided by ERISA is available at the Labor Department Internet Web site at www.dol.gov/pwba. The phone number of the PWBA office in Boston is 617.565.9600.
(Chao v. Pamby Motors, Inc., et al
Civil Action No. 302CV2140)
U.S. Department of Labor news releases are accessible on the Internet. The information in this news release will be made available in alternate format upon request (large print, Braille, audio tape or disc) from the Central Office for Assistive Services and Technology. Please specify which news release when placing your request. Call 202.693.7773 or TTY 202.693.7755.
Archived News Release — Caution: Information may be out of date.