U.S. Labor Department seeks independent fiduciary to manage Denver 401(k) plan, recovery of employee contributions

Archived News Release — Caution: Information may be out of date.

Denver - The U.S. Department of Labor has filed one lawsuit against the former owners of Datatrend Information Systems Inc. of Denver seeking the appointment of an independent trustee to manage the defunct company’s abandoned 401(k) plan in order to distribute more than $727,000 in assets to 62 participants, and a second suit against the same defendants to recover employee contributions to the plan. Both suits allege violations of the Employee Retirement Income Security Act (ERISA).

Plans are abandoned when fiduciaries designated to manage and operate them fail to fulfill their responsibilities – often following a significant business event such as a bankruptcy, merger or acquisition. As a result of the abandonment, participants do not have a way to transact business or communicate with the plan.

“The department is committed to helping workers regain access to their benefits when their plans are abandoned,” said Bradford P. Campbell, acting assistant secretary of labor for the Employee Benefits Security Administration (EBSA).

The first suit seeks to remove Gary and Nicole Nemmers as plan trustees and appoint an independent fiduciary with authority to distribute the plan’s assets to eligible participants. The department also asks the court to permanently bar the Nemmerses from serving as fiduciaries to ERISA-covered plans in the future.

In the second suit, the department seeks to recover $8,579 in employee contributions from the Nemmerses. In earlier actions filed by the department, a federal bankruptcy court ruled that the defendants cannot discharge the $8,579 in employee contributions owed to the plan.

Datatrend, an information technology consulting firm, was owned by the Nemmerses until it was dissolved in May 2004. The defendants had filed for Chapter 7 bankruptcy on September 12, 2003. The 401(k) plan has $727,713 in assets and covered up to 62 participants, according to the latest information available to the Labor Department.

In fiscal year 2006, EBSA achieved monetary results of $1.4 billion related to the pension, 401(k), health plans and other benefits for millions of American workers and their families. This case was investigated by EBSA’s regional office in Kansas City, Missouri. Employers and workers can reach EBSA at 816.426.5131 or toll-free at 1.866.444.EBSA (3272) for help with problems relating to private sector retirement and health plans.

Chao v. Nemmers
Civil Action Numbers 07-CV-00531 and 07-CV-00532

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Archived News Release — Caution: Information may be out of date.