U.S. Labor Department sues to recover retirement assets for 401(k) participants of defunct San Jose, California, company

Archived News Release — Caution: Information may be out of date.

San Francisco – The U.S. Department of Labor has sued Power & Data Technology, San Jose, California, and its president to recover $39,325 and distribute the assets remaining in the company’s abandoned 401(k) profit-sharing plan. The defunct company manufactured and distributed electrical components.

The suit, filed in the U.S. District Court for the Northern District of California, alleges that the company and Michael D. Williams of Gilroy, California, violated the Employee Retirement Income Security Act (ERISA) when they abandoned the 401(k) plan after the company ceased doing business in June 2001. As a result, 13 former employees have been unable to access their plan accounts.

The suit seeks to restore the losses to the plan that resulted from mismanagement and the misuse of $39,325 in plan assets, as well as to release an additional $20,208 in remaining plan assets. The suit also seeks to remove Williams as plan fiduciary, permanently bar him from service to plans governed by ERISA in the future and appoint an independent fiduciary to manage the plan.

“The Labor Department is committed to protecting the benefits of America’s workers and retirees,” said Billy Beaver, regional director of the department’s Employee Benefits Security Administration (EBSA) office in San Francisco. “We vigorously work to ensure that these workers and their families gain access to their retirement savings.”

To assist workers in similar situations, Labor Department rules facilitate a voluntary, safe and efficient process for winding up the affairs of abandoned plans. The rules allow financial institutions to take responsibility and distribute the assets of 401(k) plans to affected workers and their families. The department estimates that 1,650 such plans are abandoned nationwide each year.

Employers and workers with questions or concerns regarding their private sector pension and health plans can contact EBSA’s San Francisco Regional Office at 415.625.2481 or toll-free at 866.444.3272. Information is also available on the agency’s Web site at www.dol.gov/ebsa. In fiscal year 2007, EBSA achieved monetary results of $1.5 billion related to 401(k), health and other benefits for millions of American workers and their families.

Chao v. Michael D. Williams and Power & Data Technology Inc., 401(k) Profit-Sharing Plan
Civil Action Number: CV 5:08-CV-5643

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