DOL Attains Court Order Directing Defunct Firm Restore Missing 401(k) Money

A federal court in Maryland ordered a defunct engineering company and its owner to pay $388,458 to restore missing contributions to the company plan.

The U.S. District Court for the District of Maryland has ordered Bicallis LLC and its owner, Bryan Hill, to restore missing contributions to the Bicallis LLC 401(k) Plan, the Department of Labor announced.

The court order—a consent judgment of forfeiture—followed investigation by the DOL’s Employee Benefits Security Administration, which found the company and Hill had violated the Employee Retirement Income Security Act.

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Investigators determined that company matching and safe harbor contributions were owed but not made to the plan from October 2017 through December 2019.

The court ordered Hill to “irrevocably forfeit” his share of $388,458, currently held in a trust, and directed the trustee to distribute the assets to an independent fiduciary to satisfy Hill’s obligations for damages.

“The forfeiture of Bryan Hill’s shares is a substantial step towards enforcing the consent judgment in this matter,” said Philadelphia Acting Regional Solicitor of Labor Samantha Thomas in a statement. “Fiduciaries who violate their duties under federal law cannot escape the consequences of their actions.”

The court in 2022 appointed AMI Benefit Plan Administrators Inc. to serve as the independent fiduciary.

The Bicallis LLC 401(k) plan held $342,582 in retirement assets for 25 participants, as of its last DOL Form 5500 filing, in 2018. The company ceased operations in 2022.

In May 2022, the DOL obtained a court judgment, requiring the company and Hill to pay $151,942, which represented missing contributions and interest to the 401(k) plan and the costs to appoint an independent fiduciary, by December 2022.

The defendants defaulted on the judgment, and the DOL filed a motion to hold Hill and the company in contempt, which the court granted in June 2023. The contempt order directed the defendants to pay fines of $100 per day until the amounts owed were paid in full. In September 2023, the department filed a request to hold a second civil contempt hearing and for enhanced civil contempt penalties. To avoid this hearing, the defendants agreed to a consent order of forfeiture for $388,458 in assets.

“To date, neither the company nor Hill have paid the money owed in full” or distributed funds to the plan’s court-appointed independent fiduciary, according to the DOL announcement.

The lawsuit is Walsh v. Bicallis LLC et al.

Attorney Alejandro Herrera represented the DOL in the case. Hill did not respond to a request for comment.

DOL Alleges Profit-Sharing Plan Fiduciaries Took Retirement Plan Assets

The Department of Labor alleges the plan fiduciaries at a tree service company used retirement assets from a profit-sharing plan to cover personal expenses.

The Department of Labor has sued a New York tree service, alleging that plan fiduciaries breached their duties to participants of the Trees R Us Inc. Profit Sharing Plan by stealing $149,380 from plan accounts in 2019 and 2020.

Tracey Recenello, the company’s owner, president and a plan trustee, and Agnita Recenello—the company’s secretary and Tracey’s spouse—used the money for company and personal expenses, mortgage payments and college tuition, according to the DOL’s complaint, filed April 2 in U.S District Court for the Eastern District of New York.

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Further, the DOL alleges the Recenellos and the company have failed to file required annual Form 5500 reports to the regulator.

“Fiduciary defendants breached their duties of exclusive purpose, prudence and loyalty, caused the Plan to enter into non-exempt prohibited transactions, and engaged in self-dealing,” the DOL’s attorneys argue in the complaint.

The DOL is seeking a court order to restore all losses to the plan; that any money currently in fiduciary defendants’ accounts in the plan be offered to restore the misappropriated funds; and that the fiduciary defendants promptly file annual reports for the plan, according to the complaint.  

Additionally, the DOL requests the court appoint an independent fiduciary to administer the plan at the fiduciary defendants’ expense, remove the Recenelllos from their roles as fiduciaries to the plan and permanently bar them from serving as fiduciaries to ERISA-covered plans.

Trees R Us Inc. is located in Bay Shore, New York, and established the plan effective January 1, 2012, according to the complaint.

The Trees R Us Inc Profit Sharing Plan held $138,994 in retirement assets for 30 participants, as of the last DOL Form 5500 filing, in 2017.

The DOL sued two Maryland profit-sharing retirement plans earlier this year and at least six profit-sharing plans in 2023.

Representative of the DOL referred a request for comment on the lawsuit to the complaint filing. Representatives of Trees R Us could not be reached for comment.

The case is Julie A. Su, acting Secretary of Labor, United States Department of Labor v. Trees R Us Inc et al.  

The DOL is represented by Seema Nanda, solicitor of labor; Jeffrey Rogoff, regional solicitor and Michael Hartman, counsel for ERISA at the office of the regional solicitor.

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