U.S. Labor Department obtains default judgment and appointment of independent fiduciary for 401(k) plan abandoned by Buffalo, New York, employer

New York – The U.S. Department of Labor has obtained a default judgment appointing an independent fiduciary to manage the abandoned 401(k) plan of defunct Digitel Solutions for Business Inc. or Empire Telecom Systems Corp., formerly located in Buffalo, New York.

The court action, entered in the U.S. District Court for the Western District of New York, appointed Thomas Forese Jr. president and chief executive officer of Global Trust Co. and its parent company, Northeast Retirement Services Inc. of Woburn, Massachusetts, to serve as the independent fiduciary of the Digitel Solutions for Business Inc. 401(k) Plan. The independent fiduciary will distribute the plan’s assets to eligible participants and beneficiaries.

The 401(k) plan also was known as Empire Telecom Systems Retirement Plan. At various times between 2000 and 2004, Laurence Davis (also known as Lawrence Davis), Christopher Sutton, Ronald Kelly and Michael Groh stopped managing the plan after the company ceased operations around June 2004, and failed to take steps to terminate the plan and distribute its assets to former employees covered by the plan. These individuals were former officials of the company.

As a result, employee participants of the plan were unable to access their 401(k) accounts. Under the Employee Retirement Income Security Act (ERISA), plans must be managed by named fiduciaries. In the absence of a fiduciary, participants and beneficiaries cannot obtain information, make investments or collect retirement benefits.

In September 2009, the Labor Department sued under the provisions of ERISA to obtain appointment of an independent fiduciary to administer the plan. Since no authorized representative of the plan responded to the lawsuit, the department petitioned the court for a default judgment in this matter. The court recently granted that petition, entering the default judgment and appointing the independent fiduciary.

“Even in a small case like this, workers should know that they can turn to the Labor Department for assistance when they find themselves locked out of access to their retirement plan,” said Jean Ackerman, regional director in Boston, Massachusetts, for the Labor Department’s Employee Benefits Security Administration (EBSA). “I am pleased that we were able to resolve this matter to the benefit of the remaining participants of this 401(k) plan.”

This suit resulted from an investigation conducted by EBSA’s Boston Regional Office. Employers and workers can contact the Boston office at 617.565.9600 or toll-free at 866.444.3272 for help with any problems relating to private sector pension and health plans. In fiscal year 2009, EBSA achieved monetary results of $1.3 billion related to pension, 401(k), health and other benefits for millions of American workers and their families. Additional information can be found at http://www.dol.gov/ebsa.

Solis v. Digitel Solutions for Business Inc. 401(k) Plan, a/k/a Empire Telecom Systems Retirement Plan
Civil Action Number: 1:09-CV-768

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