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Release Date: September 5, 2007
Release Number: 07-1345-NEW/BOS 2007-239
Contact Name: John M. Chavez
Phone Number: 617.565.2075
New York – The U.S. Department of Labor has
obtained a federal court order appointing an independent fiduciary to
manage the abandoned 401(k) plan of New York City-based American
Financial Services Inc.
Under the court order, entered in the U.S. District
Court for the Southern District of New York, Jacqueline M. Carmichael is
appointed to be the independent fiduciary of the plan. Carmichael will
administer the plan; distribute the assets to participants,
beneficiaries and any plan creditors; and terminate the plan.
The Labor Department filed suit this past June after
learning that the company, which was located at 2 World Trade Center in
Manhattan, ceased operations after the terrorist attacks of September
11, 2001. At that time, the plan trustee stopped performing his duties
and the president of the company did not appoint a successor fiduciary.
The Employee Retirement Income Security Act (ERISA) requires that
employee benefit plans be managed by named fiduciaries. Without a
fiduciary, plan participants and beneficiaries cannot obtain
information, access accounts to make investments or collect retirement
benefits.
Plans become “orphan plans” when they are
abandoned by all fiduciaries designated to manage and operate them. As
of February 8, 2006, the plan had 10 participants and $22,288.67 in
assets.
“The Labor Department recognizes the
extraordinarily difficult circumstances this company faced,” said
Jonathan Kay, regional director in New York for the Labor Department’s
Employee Benefits Security Administration (EBSA). “We took this legal
action to protect the 401(k) plan’s participants by ensuring that they
receive their retirement funds.”
The Labor Department’s suit resulted from an
investigation by EBSA’s regional office in New York. Employers and
workers can contact the office at 212.607.8600 or toll-free at
1.866.444.EBSA (3272) for help with problems relating to private sector
pension and health plans. In fiscal year 2006, EBSA achieved monetary
results of $1.4 billion related to pension, 401(k), health and other
benefits for millions of American workers and their families.
Chao v. American Financial Services Inc. 401(k) Plan
Civil Action Number: 07-CV-4845
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