US Labor Department sues to appoint independent fiduciary for 401(k) plan abandoned by Medford, Mass., employer

BOSTON – The U.S. Department of Labor has filed a lawsuit in the U.S. District Court for the District of Massachusetts seeking the appointment of an independent fiduciary to oversee the abandoned 401(k) plan of defunct Accurate Paving Inc., formerly located in Medford, Mass.

The Accurate Paving Inc. Prime Builder 401(k) Plan was sponsored and administered by the company until it ceased all operations in 2003. The Labor Department’s suit alleges that Accurate Paving failed to take steps to ensure the continuing prudent administration of the plan. The “pertinent period” covered by the suit includes plan years 2003 until the present.

The department’s suit alleges that John Trainor was president, treasurer and secretary of Accurate Paving, and served as administrator of the 401(k) plan, and that John Pappas was the plan trustee. After the company went out of business, these individuals stopped managing the plan and failed to take steps to terminate it and distribute its assets to covered former employees.

As a result, plan participants have been unable to access their 401(k) accounts. Under the Employee Retirement Income Security Act, the federal law that protects private pension and employee benefit plans and which is administered by the Labor Department’s Employee Benefits Security Administration, 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.

Despite diligent efforts, the Labor Department has been unable to contact either Trainor or Pappas. The plan had five participants and approximately $6,874 in assets as of April 13, 2009, the latest data available.

The Labor Department’s suit asks the court to appoint an independent fiduciary to administer the plan, distribute its assets to eligible 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 locked out of access to their retirement plan,” said Edward Maloney, acting regional director of EBSA’s Boston office. “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 suit resulted from an investigation conducted by EBSA’s Boston Regional Office. Employers and workers can contact that 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 2009, EBSA achieved monetary results of $1.3 billion related to pension, 401(k), health and other benefits for millions of American workers and their families. Additional information can be found at http://www.dol.gov/ebsa.

Solis v. Accurate Paving Inc.; Civil Action Number: 1:10-CV-11349-NMG

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