U.S. Labor Department sues to appoint independent fiduciary for 401(k) plan abandoned by Rochester, New York, employer

New York – The U.S. Department of Labor has filed a lawsuit asking the U.S. District Court for the Western District of New York to appoint an independent fiduciary to oversee the abandoned 401(k) plan of defunct Bonnie Optical Inc. of Rochester, New York.

The Bonnie Optical Inc. 401(k) Plan was sponsored by Bonnie Dolan (also known as Bonnie Ariola) until 1999 when her company went out of business. Dolan, the sole trustee and fiduciary of the plan, stopped managing the plan and took no steps to terminate the plan and distribute its assets to former employees covered by the plan.

As a result, the employees were unable to access their 401(k) accounts. Under the Employee Retirement Income Security Act (ERISA), plans must be managed by named fiduciaries. In the absence of a plan fiduciary, participants and beneficiaries cannot obtain plan information, make investments or collect retirement benefits.

For at least the last three years, the plan’s assets have not appreciated in value but rather have been diminished on a monthly basis by the custodian’s service fees. The Labor Department’s suit alleges Dolan did not act to stop the loss of plan assets by distributing assets to plan participants or by preserving the assets in another investment vehicle.

The suit asks the court to order Dolan to restore to the plan all losses with interest attributable to her fiduciary breaches; order her removal as fiduciary to the plan; and appoint an independent fiduciary to manage the plan, distribute its assets to participants and beneficiaries, and oversee the plan’s termination.

“Even in a small case like this, workers should know that they can turn to the Labor Department for assistance when they find themselves in this type of situation,” said Jean Ackerman, regional director in Boston for the Labor Department’s Employee Benefits Security Administration (EBSA). “We took this legal action to ensure that the plan is properly managed so that its participants can finally gain access to their retirement assets.”

This legal action resulted from an investigation conducted by EBSA’s Boston Regional Office. Employers and workers can contact the Boston office at 617.565.9600 or toll-free at 866.444.3272 for help with any problems relating to private sector pension and health plans. In fiscal year 2008, EBSA achieved monetary results of $1.2 billion related to pension, 401(k), health and other benefits for millions of American workers and their families. Additional information can be found at www.dol.gov/ebsa.

Chao v. Bonnie Dolan
Civil Action Number: 09-CV-6087

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