US Labor Department files suit to recover losses to, appoint independent fiduciary for Albany, New York, retirement plan

Date of Action: Jan. 26, 2015

Type of Action: Complaint

Names of Defendant: Daniel Byrnes and the Fort Orange Capital Management Profit-Sharing Plan

Allegations: The Fort Orange Capital Management Profit-Sharing Plan was established in January 2003 as an employee pension benefit plan for employees of Fort Orange Capital Management, an Albany investment management and commodity trading company which ceased operations in 2005.  Daniel Byrnes, the company’s sole owner and officer, was the plan’s trustee and a fiduciary under the Employee Retirement Income Security Act.

An investigation by the Labor Department’s Employee Benefits Services Administration found that Byrnes violated his fiduciary duties to administer the plan prudently and solely on behalf of its participants and failed to diversify the plan’s investments to minimize the risk of large losses. In 2011 and 2012, Byrnes used $220,000, or approximately 96% of the plan’s assets, to purchase eleven million shares of  a single penny stock, Sarissa Resources Inc.. Sarissa Resources, Inc. is a Nevada mineral exploration company, for which Byrnes currently serves as president and interim chief financial officer. In addition, the plan has not filed a Form 5500 since 2002, has not issued benefits statements to participants since 2003, and has not updated its Summary Plan Description.

Resolution: The department’s complaint asks the court to have Byrnes provide an accounting of the plan’s assets and liabilities, gains and losses and any payments received or income earned by the plan since January 2011; restore all losses to plan stemming from his fiduciary breaches; offset any benefits due Byrnes from the plan; remove Byrnes as fiduciary and permanently prohibit him from serving as a fiduciary or service provider to any ERISA-covered plan. The department also asks for the appointment of an independent fiduciary with authority to marshal the plan’s assets, pursue claims on behalf of the plan, take appropriate actions for the plan’s rehabilitation or liquidation and distribute the plan’s assets to its participants, their beneficiaries and creditors.

Quote: “Daniel Byrnes not only violated the law through his behavior, he violated the trust that the plan’s participants placed in him,” said Susan Hensley, EBSA’s regional director in Boston. “We seek his removal and the appointment of an independent fiduciary to help undo his actions and allow plan participants access to their benefits.”

Court: U.S. District Court for the Northern District of New York

Docket Number: 1:15-cv-00093-FJS-RFT

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