U.S. Labor Department sues to appoint independent fiduciaries for profit-sharing plans abandoned by two defunct Binghamton, New York, companies

New York – The U.S. Department of Labor has filed two lawsuits asking the U.S. District Court for the Northern District of New York to appoint independent fiduciaries to oversee the abandoned profit-sharing plans of defunct H&M Tool & Machine Co. Inc. and Valmar Industrial Corp., both formerly located in the Binghamton, New York, area.

Each company sponsored a profit-sharing plan, and these were under control of the same owner. Both plans had the same fiduciary that stopped administering the plans when the companies went out of business in 2004. As a result, the former employees who participated in the profit-sharing plans were unable to access their plan accounts.

Under the Employee Retirement Income Security Act (ERISA), employee benefit 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.

The Labor Department’s suits allege that the plans have not filed legally required annual reports since 1994 nor provided their participants with required summary plan descriptions. Since 2004, participants and beneficiaries have not been able to obtain distributions from either plan. As of May 29, 2007, the H&M Tool plan had assets valued at $272,014 and the Valmar Industrial plan’s assets were valued at $56,690. The custodian of the assets for both plans is JP Morgan Chase Bank.

The department’s suits ask the court to appoint independent trustees and fiduciaries to administer the plans, and either distribute plan benefits or the assets if the plans are terminated to eligible participants and beneficiaries.

“Even when companies fall on hard times, fiduciaries of employee benefit plans cannot simply walk away from their responsibilities to the participants and beneficiaries of those plans,” said Jean Ackerman, director of the Boston office for the Labor Department’s Employee Benefits Security Administration (EBSA), which conducted the investigations that led to these suits. “We took this legal action to ensure that these plans are properly managed so that the participants can gain access to their retirement assets.”

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 2007, EBSA achieved monetary results of $1.5 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.

Secretary of Labor v. H&M Tool & Machine Co. Inc. Profit-Sharing Plan
Civil Action Number: 3:09-CV-00499-DNH
Secretary of Labor v. Valmar Industrial Corp. Profit-Sharing Plan)
Civil Action Number: 3:09-CV-00498-DNH-DEP

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