US Labor Department sues owner of former company in Emeryville, California, to restore more than $43,000 to 401(k) Plan

Date of Action: April 20, 2015

Type of Action: Civil Complaint

Names of Defendants: Lance Silva, National Upholstering Company, Inc., and the National Upholstering Company 401(k) Plan

Allegations: Defendants Lance Silva and National Upholstering Company, Inc. administered a 401(k) Plan for their employees.  In September and November of 2011, Silva improperly caused Fidelity Investments to distribute $43,326 from four other participant’s accounts to himself, without authorization, with the checks payable to himself.  In addition, after the company ceased operations in 2010, the defendants failed to take proper steps to ensure that plan participants received distributions of their account balances.  The complaint alleges that these activities violated the Employee Retirement Income Security Act.

Resolution: The department is asking the court to order Silva to restore all losses, including lost opportunity costs, to the 401(k) Plan and to permanently enjoin Silva from serving as a fiduciary or service provider to any plan covered by ERISA.  The complaint also seeks the appointment of an independent fiduciary to administer the 401(k) Plan in order to effectuate its termination and the distribution of 401(k) Plan assets to the participants.

Silva’s conduct was also addressed by the department in a parallel criminal investigation.  As a result, on February 25, 2015, Silva pleaded no contest to two counts of Grand Theft in state court for unlawfully removing 401(k) assets belonging to other participants. [Superior Court of California, Alameda County, Docket No. 461281]

Court: United States District Court, Northern District of California

Docket Number: 4:15-cv-01771-KAW

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