Connecticut Businessman Accused of ERISA Abuse, Misusing 401(k) Pension Funds

Manchester, CTIt may be small potatoes compared with the millions of dollars some employees have lost in their 401(k) and ERISA pension plans, but the employees of a small Connecticut company are no less unhappy about the recent violation of their employee 401(k) and the subsequent loss of their ERISA benefits.


Earlier this month the US Department of Labor announced that it was launching a lawsuit against Manchester Moving and Storage, Inc. and its president, Frank N. Serignese, of Manchester, Connecticut, for alleged misuse of more than $36,000 belonging to the employees of the company's 401(k) plan.

The lawsuit alleges that Serignese and the company violated the Employee Retirement Income Security Act (ERISA) between January 29, 2005 and April 28, 2007 by failing to remit to the plan employee contributions and participant loan repayments. The company was the plan sponsor and plan administrator, and Serignese served as the plan's trustee. Both were fiduciaries to the plan with responsibility for collecting money and property owed to the plan, which was funded primarily through contributions withheld from employee paychecks.

The US Department of Labor suit alleges that the defendants collected and used for the benefit of the company $31,709.94 in employee contributions and $4,318.21 in loan repayments belonging to the plan.

"This misuse of plan assets is a clear violation of ERISA," said Jean Ackerman, director of the Boston Regional Office of the Labor Department's Employee Benefits Security Administration (EBSA. "The law expressly requires plan assets to be used only for the benefit of plan participants and beneficiaries, and the Labor Department will not tolerate the misuse of plan assets for any other purpose."

The action seeks a court order permanently barring Serignese from serving as a fiduciary or service provider to any ERISA-covered plan and is pursuing a requirement of the company and Serignese to restore to the plan all losses incurred by their actions??"with interest??"together with the requirement that the defendants correct their prohibited transactions.

As fewer companies provide pension benefits??"a standard practice for previous generations??"it has become increasingly incumbent upon workers to fund their own retirements. To provide tax-deferred income in their twilight years, workers now depend heavily on 401(k) savings plans, many of which have been gutted by the bear stock market and the overall poor health of the economy.

When companies and 401(k) sponsors are suspected of abusing their fiduciary duties, it only makes a bad situation worse. For many, there is insufficient opportunity to recover lost gains.