U.S. Labor Department obtains appointment of independent fiduciary for abandoned 401(k) plan of Nashua, New Hampshire company

Archived News Release — Caution: Information may be out of date.

Boston – The U.S. Department of Labor has obtained a federal court order appointing an independent fiduciary to manage the abandoned 401(k) plan of Nashua, New Hampshire-based International Paper Box Machine Co. Inc.

The court order, entered in the U.S. District Court for the District of New Hampshire, appointed Northeast Retirement Services Inc. of Woburn, Massachusetts, to be the independent fiduciary of the International Paper Box Machine Co. Inc. Salary Deferral Retirement Plan. Northeast Retirement Services will administer the plan, distribute the assets to eligible participants and beneficiaries, and terminate the plan.

The Labor Department filed suit under the provisions of the Employee Retirement Income Security Act (ERISA), the federal law that protects private sector employee pension and benefit plans. The suit alleged that Hugh McAdam was president of International Paper Box Machine Co., which had filed for bankruptcy in 2002, and that McAdam had pled guilty to embezzling funds from the plan on November 28, 2006. International Paper Box Machine Co. was the plan’s sponsor, and McAdam was the only authorized fiduciary of the plan. McAdam’s criminal conviction prevents him from serving as a fiduciary to any employee benefit plan.

Before McAdam pled guilty to embezzling funds from the plan, and was thereafter prohibited by law from serving as a fiduciary to the plan, he had a fiduciary duty to appoint a qualified individual or entity to serve as the fiduciary of the plan; McAdam failed to fulfill that duty. Therefore, the department’s suit asked the court to appoint an independent fiduciary to carry out those duties. Without a fiduciary, plan participants and beneficiaries cannot obtain their retirement benefits.

Plans become “orphan plans” when they are abandoned by all fiduciaries legally designated to manage and operate them. As of July 2, 2007, the plan had 75 participants and $2,204,807 in assets. Fidelity Management Trust Co. is custodian of the plan’s assets.

Said James Benages, Boston regional director for the department’s Employee Benefits Security Administration (EBSA), “It is unfortunate when a fiduciary of an employee benefit plan abandons it and leaves plan participants unable to access their own funds. We took this legal action to protect the 401(k) plan’s participants by ensuring that they receive their retirement funds.”

The department’s legal action resulted from an investigation conducted by EBSA’s Boston Regional Office. In fiscal year 2006, EBSA achieved monetary results of $1.4 billion related to pension, 401(k), health and other benefits for millions of American workers and their families. Employers and workers can contact the regional office at 617.565.9600 or toll-free at 1.866.444.EBSA (3272) for help with problems relating to private sector pension and health plans. Additional information can be found at www.dol.gov/ebsa.

Chao v. International Paper Box Machine Co. Inc.
Civil Action Number: 1:07-CV-00331-SM

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