US Labor Department sues defunct corporation in Wayne, Pennsylvania, to distribute nearly $1 million in assets from 401(k) plan

Date of Action: Sept. 29, 2015

Name(s) of Defendants: Encorium Group Inc.

Allegations: Based on an investigation conducted by the U.S. Department of Labor’s Employee Benefits Security Administration, the Secretary of Labor filed a complaint alleging the following:

Encorium Group Inc.’s predecessor, the Covalent Group, established a 401(k) Profit Sharing Plan in 1996 to provide a way for its employees to voluntarily save for their retirement years on a tax-free basis. The plan was funded by elective employee contributions and discretionary employer contributions.

In or around September 2009, the company initiated procedures to terminate the plan. In or around October 2009, the company ceased all business operations. However, the company needed to take additional steps to effectuate the termination of the plan and failed to take those steps.

The investigation found that since 2009, neither the company nor any former officers of the company have taken fiduciary responsibility for the operation and administration of the plan.

As of May 12, 2015, the plan had 33remaining participants with individual account balances totaling $966,752.08. The plan’s assets are currently held by State Street Bank and Trust.

Resolution: The complaint seeks to remove the defendant, Encorium Group Inc., from its position as a fiduciary with respect to the plan and to appoint an independent fiduciary to terminate the plan and distribute the remaining assets.

Court: United States District Court for the Eastern District of Pennsylvania

Docket Number: 15-5365-TJS

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