The U.S. Department of Labor has obtained a consent judgment in federal court in which the trustee of two defined-benefit pension plans for now-defunct apparel manufacturers admits to entering into $4.23 million in alleged unlawful plan transactions between 2002 and 2010.
This story first appeared in the July 25, 2013 issue of WWD. Subscribe Today.
Colette Mordo, trustee and fiduciary to the pension plans of the Manhattan-based Sadimara Knitwear Inc. and Stallion Knits Ltd., also agrees to restore, up to that amount, any shortfall in assets owed to the plans’ participants and beneficiaries. The judgment resolves a lawsuit filed in the U.S. District Court for the Southern District of New York alleging that Mordo violated her fiduciary duties under the Employee Retirement Income Security Act. The lawsuit charged that Mordo authorized the pension plans to make improper loans and transfers of plan assets over several years to multiple recipients, including members of the Mordo family, International Design Concepts LLC and Apparel Group International LLC, two companies in which she had an ownership interest.
“If you’ve been entrusted with the assets of an employee benefit plan, it’s illegal to enrich yourself or your family at the plan’s expense,” said Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi.
The judgment removes Mordo from any and all fiduciary positions with respect to the plans and permanently bars her from serving as a fiduciary to any ERISA-covered plan. It also appoints David M. Lipkin of Metro Benefits Inc. as the independent fiduciary who will administer the plans, determine and pay out benefits to participants, and terminate the plans. The Labor Department is authorized to seek a contempt order should Mordo violate any terms of the judgment.
Sadimara Knitwear Inc. and Stallion Knits Ltd. were garment companies headquartered in Manhattan and sponsored the plans to provide pension benefits to their employees. This case resulted from an investigation by the New York office of DOL’s Employee Benefits Security Administration.