U.S. Department of Labor obtains consent judgment with fiduciary of defunct Atlanta-based mortgage loan company

Atlanta – The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) has obtained a consent judgment allowing Abby Paschal to continue as a fiduciary in order to terminate the ZNET Financial Services’ 401(k) plan and distribute its assets to participants.

If Paschal fails to comply with the judgment within the time agreed, the Labor Department will have the right to remove her as fiduciary and ask for a court-appointed independent fiduciary paid for at this defendant’s expense. It also requires that Paschal, at her own expense, obtain eight hours of education related to the fiduciary obligations codified at Title I of the Employee Retirement Income Security Act (ERISA). The judgment was entered in the U.S. District Court for the Northern District of Georgia.

The original lawsuit alleged that ZNET Financial Services, Abby Paschal and Farbod Zohouri violated ERISA when they failed to terminate the company’s 401(k) plan and distribute the assets to participants after the company ceased operations. In addition, the suit alleged that since the company ceased operations it had failed to administer the plan and has effectively abandoned it.

“The Labor Department is pleased that rights of pension plan participants will be protected by this consent judgment,” said R.C. Marshall, regional director for EBSA in Atlanta.

ZNET Financial Services was a mortgage broker based in Atlanta, which ceased operations approximately two years ago. In November 2007 the company’s 401(k) plan had assets of approximately $68,913, the latest data available.

Employers with similar problems who are not yet subjects of EBSA investigations may be eligible to participate in the department’s Voluntary Fiduciary Correction Program. Participation requires employers to make workers whole but allows them to avoid EBSA enforcement actions and civil penalties as well as any applicable excise taxes.

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. Employers and workers can reach EBSA’s Atlanta Regional Office at 404.302.3900 or toll-free at 866.444.3272 for help with problems relating to private sector retirement and health plans. For more information, see www.dol.gov/ebsa.

Solis v. ZNET Financial Services Inc.
Civil Action File Number 1:09-cv-2207

U.S. Department of Labor news releases are accessible on the Department's Newsroom page. The information in this news release will be made available in alternate format (large print, Braille, audio tape or disc) from the COAST office upon request. Please specify which news release when placing your request at 202.693.7828 or TTY 202.693.7755. The Labor Department is committed to providing America's employers and employees with easy access to understandable information on how to comply with its laws and regulations. For more information, please visit the Department's Compliance Assistance page.