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July 24, 2013 01:00 AM

DOL removes plan trustee for alleged misuse of pension assets

Hazel Bradford
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    The Labor Department won a consent judgment against a pension trustee for allegedly misusing $4.2 million in assets for the Sadimara Knitwear Inc. and the Stallion Knits Ltd. pension plans in New York.

    The consent judgment and order announced Wednesday also removes Colette Mordo as trustee and permanently bars her from ever serving as a fiduciary. Ms. Mordo's family owned the two companies.

    The consent decree said Ms. Mordo used plan assets between 2002 and 2010 to make allegedly improper loans and transfers to family members and other family-controlled businesses.

    Following complaints from two participants, the Labor Department's Employee Benefits Security Administration filed suit in 2010 against plan trustees, including Ms. Mordo and her late husband, in the U.S. District Court for the Southern District of New York.

    The suit also alleged that Ms. Mordo interfered with participants' benefit accruals and distributions.

    The two plans have approximately $985,000 in assets. “We believe that monies still in the plan are more than sufficient to pay anything that hasn't been paid to any employees,” said Ms. Mordo's attorney, Donald Kreindler of Phillips Nizer in New York, in an interview.

    Ms. Mordo, the sole trustee, guarantees any potential losses to participants up to $2.4 million, the amount of the improper transactions.

    “It's illegal to enrich yourself or your family at the plan's expense,” said Assistant Secretary of Labor Phyllis Borzi. “DOL will not hesitate to investigate and pursue appropriate legal remedies whenever fiduciaries fail to meet this standard.”

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    December 12, 2022 page one

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