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Release Date: 02/10/2005
Release Number: 05-237-PHI
Contact Name: Gloria Della
Phone Number: 202.693.8666
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Philadelphia, Pennsylvania - The U.S. Department
of Labor has sued bankrupt Foley Jewelers Christiana, Inc. (FJC) of
Newark, Delaware, its president, and the administrator of its 401(k) plan
for failing to remit and timely forward employee contributions to the
401(k) plan. The department also filed an adversary legal action in
bankruptcy court against FJC’s president seeking to have his debt to the
plan deemed non-dischargeable. |
“Trustees
of a 401(k) plan have a responsibility to ensure that the assets of the
plan are used solely to benefit participants,” said Mabel Capolongo,
director of the department’s Philadelphia regional office of the
Employee Benefits Security Administration (EBSA). “One of the most
important responsibilities is putting money from workers’ wages into
their 401(k) accounts on time.” |
The
department’s federal court lawsuit alleges that FJC, president David A
Mazer and Foley Brofsky, Inc. (the plan administrator) violated the
Employee Retirement Income Security Act (ERISA) when they failed to
forward and timely remit employee contributions to the plan’s account
starting in January 2002. The suit also alleges ERISA violations resulting
from the failure to hold the 401(k) contributions in trust, the failure to
separate the contributions from the assets of the company, and the failure
to pay interest on any delinquent contributions. |
The
suit seeks to require that the defendants restore all losses with
interest. The department also asks the court to appoint an independent
fiduciary to replace the defendants and to permanently bar them from
service to any ERISA-covered plan in the future. The lawsuit and adversary
complaint resulted from an investigation conducted by EBSA’s
Philadelphia regional office. The legal actions were filed in federal
district court and federal bankruptcy court in Philadelphia. |
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Mazer operated a chain of jewelry stores, including
Foley Jewelers Christiana and Foley Brofsky, Inc. The 401(k) plan,
sponsored by Foley Brofsky, has approximately 19 participants. The plan
had $561,469 in assets as of December 31, 2003. Both FJC and Mazer are in
bankruptcy proceedings. |
Employers
with similar problems who are not yet the subject of an investigation by
EBSA may be eligible to participate in the department’s Voluntary
Fiduciary Correction Program (VFCP). Participation in the VFCP requires
employers to make workers whole but allows them to avoid EBSA enforcement
actions and civil penalties as well as any applicable excise taxes. For
more information about the VFCP, see www.dol.gov/ebsa. |
In
fiscal year 2004, EBSA achieved record monetary results of $3.1 billion
related to the pension, 401(k), health and other benefits of millions of
American workers and their families. Employers and workers can reach EBSA’s
Philadelphia regional office at 215.861.5300 or EBSA’s toll-free number
at 1.866.444.EBSA (3272), for help with problems relating to
private-sector retirement and health plans. |
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(Chao v. Mazer)
Civil Action No. 05-611
Bankruptcy Case No. 05-00077-kjc |
U.S.
Labor Department news releases are accessible on the Internet at
www.dol.gov. The information in this news release will be made available
in alternate format upon request (large print, Braille, audio tape or
disc) from the COAST office. Please specify which news release when
placing your request at 202.693.7765 or TTY 202.693.7755. The U.S.
Department of Labor is committed to providing America's employers and
employees with easy access to understandable information on how to comply
with its laws and regulations. For more information, please visit
www.dol.gov/compliance. |
