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Release Date: 12/31/2002
Release Number: BOS 2002-255
Contact Name: John M. Chavez
Phone Number: 617.565.2075
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Boston, Massachusetts - Three company officers
of Pamby Motors, Inc., of Ridgefield, Connecticut, have agreed to restore
nearly $53,000 to the company’s 401(k) plan as part of a consent
judgment settling a U.S. Labor Department lawsuit. |
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The lawsuit, filed simultaneously with the consent
judgment in the U.S. District Court for the District of Connecticut,
alleged that Pamby Motors, Inc., and John Pambianchi, Michael Pambianchi,
and Frederick Pambianchi, as fiduciaries of the 401(k) plan, violated the
Employee Retirement Income Security Act. ERISA is the federal law that
protects employee pension and welfare benefit plans, including 401(k)
plans. |
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“Trustees of employee pension and benefit plans must
realize that the law requires them to deal with plan assets in a careful
and prudent manner,” said James Benages, regional director in Boston for
the department’s Pension and Welfare Benefits Administration (PWBA). “They
must scrutinize investments for the plan that could prove to be too risky.”
Benages’ office investigated the case. |
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The suit alleged that at various times during 1999, the
three individual defendants, then serving as trustees of the plan,
permitted the securities broker for the plan to invest a total of $720,000
in plan assets in unsecured promissory notes with FON Digital Network,
Inc., which later fell into default. The suit also alleged that the three
caused $21,708 in surrender charges from a transaction that benefited only
them to be inappropriately allocated to all plan participants. |
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The company served as the plan administrator, and was
charged with failing to maintain a fidelity bond to insure against fraud
and dishonesty by every person who handled the plan’s funds or property. |
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The consent judgment was signed by U.S. District Judge
Christopher F. Droney on December 23. It prohibits the defendants from
future violations of ERISA, requires the three individual defendants to
reallocate from their own plan accounts a total of $52,997.38 for the
benefit of the other participants and beneficiaries of the plan, and
requires the company to obtain a proper fidelity bond to protect the plan.
The three individuals are also prohibited from serving as fiduciaries to
any ERISA-covered plan for ten years from the date of the judgment. |
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The recovery in this matter is in addition to $243,000
that the defendants restored to the Pamby Motors, Inc. 401(k) Plan in
connection with a related, recently-settled private lawsuit brought by
plan participants. |
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More information about the pension and benefit
protections provided by ERISA is available at the Labor Department
Internet Web site at www.dol.gov/pwba. The phone number of the PWBA office
in Boston is 617.565.9600. |
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(Chao v. Pamby Motors, Inc., et al
Civil Action No. 302CV2140)
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U.S. Department of Labor
news releases are accessible on the Internet. The information in this news
release will be made available in alternate format upon request (large
print, Braille, audio tape or disc) from the Central Office for Assistive
Services and Technology. Please specify which news release when placing
your request. Call 202.693.7773 or TTY 202.693.7755. |
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