U.S. Labor Department obtains default judgment and court appointment of independent fiduciary for 401(k) plan abandoned by Rochester, New York, employer

New York – The U.S. Department of Labor has obtained a federal court order in the form of a default judgment appointing Jacqueline M. Carmichael as the independent fiduciary to manage 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 Optical Inc. Bonnie Dolan (also known as Bonnie Ariola) was the sole owner of the company until it ceased operating in 1999 and the sole plan trustee. When the company ceased operating, she stopped managing the plan and took no steps to terminate it 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, 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, Dolan allowed the plan’s assets, which were not appreciating in value, to be steadily depleted by account charges. The Labor Department’s lawsuit resolved by this order, filed during February 2009 in the U.S. District Court for the Western District of New York, alleged that Dolan did not act to stop the loss of plan assets by distributing assets to plan participants or preserving the assets in a suitable investment vehicle.

After the defendant failed to respond to the suit, the Labor Department petitioned the court for a default judgment and the immediate appointment of an independent fiduciary to manage the 401(k) plan. The court order also holds Bonnie Dolan liable for $1,202.22, orders her to forfeit her own account balance from the plan, removes her as the plan’s trustee, and bars her from serving as a fiduciary or service provider for the plan.

Under the judgment, the independent fiduciary has full authority to administer the plan, distribute its assets to eligible participants and beneficiaries, and thereafter terminate the plan.

“This legal action should demonstrate that the Labor Department will take whatever steps are necessary to protect the retirement funds of abandoned plan participants, even in a small case such as this,” said Jean Ackerman, director of the Boston Regional Office for the Labor Department’s Employee Benefits Security Administration (EBSA), which investigated the case. “Workers should feel confident that they can turn to the department for assistance when they find themselves in this type of situation.”

Employers and workers can contact EBSA’s 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.

Solis v. Bonnie Dolan
Civil Action Number: 6:09-CV-06087-MAT

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