Benefits

Pension Plans Trustee Faces Labor Department Lawsuit Over Asset Shift

By Staff Report

Dec. 1, 2010

The trustee for the pension plans of two closed New York garment companies is charged in a Labor Department lawsuit with transferring more than $4.6 million in plan assets to family members and other businesses in which she had an interest, confirmed John Chavez, a Labor Department spokesman.


The lawsuit, filed in U.S. District Court in New York on Nov. 23, alleges that Colette Mordo and other plan trustees and fiduciaries violated their fiduciary duties transferring the money as well as preventing eligible employees from participating in the two plans for the defunct Manhattan companies—Sadimara Knitwear Inc. and Stallion Knits.


The lawsuit states Mordo and the other plan fiduciaries had prevented plan participants from receiving the full benefits they were entitled to receive from the plans for the businesses owned by the Mordo family.


Mordo; her husband, Matthew Mordo; and son, Alan Mordo, were all participants in the plans, according to the news release. Matthew and Alan Mordo are both deceased.


The lawsuit seeks to require Mordo to restore all losses to the plans,
“plus lost opportunity costs that resulted from her improper actions, and to permanently bar her from serving as a fiduciary to any ERISA-covered plan in the future,” a Labor Department news release said.


“Such flagrant misuse of pension plan assets is intolerable,” added Phyllis Borzi, assistant secretary of labor for the Employee Benefits Security Administration, in the release.


The Sadimara Knitwear Inc. Defined Benefit Pension Plan had $1.72 million in assets, and the Stallion Knits Defined Benefit Pension Plan had $1.53 million, both as of Dec. 31, 2008, according to the company’s Form 5500 filings.


Mordo could not immediately be reached for comment. 


Filed by Doug Halonen of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.


 


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