DOL Sues Shuttered Arizona Computer Company Profit-Sharing Plan

Plan sponsors with retirement profit-sharing plans that fiduciaries fail to operate in the best interests of workers are an enforcement priority for the Department of Labor, based on lawsuits brought by the agency so far this year.

Most recently, an Arizona computer equipment company is alleged by the DOL to have neglected to manage or administer the company profit-sharing plan since 1997, preventing distribution of retirement plan assets to employees, according to the complaint. The lawsuit, Su v. Infinisys Inc. et al, was filed Thursday in U.S. District Court for the District of Arizona.

The complaint says that without the cooperation of Infinisys Trustee Richard Hauptmann, there is no one to provide for the prudent liquidation of the 401(k) plan’s assets to authorize distributions to 401(k) plan participants.

American Funds Services Co., the transfer agent for mutual funds in the retirement plan, has said it will only accept direction for distribution of the plan’s assets from the “named 401(k) Plan Trustee Hauptmann or a properly appointed successor fiduciary,” the DOL complaint states.  

“Richard Hauptmann, the 401(k) Plan’s sole Trustee, who was also the owner, President, and CEO of Defendant Infinisys, Incorporated, abandoned the 401(k) Plan and his duties as fiduciary without distributing the 401(k) Plan assets to the 401(k) Plan participants, leaving retirement funds for ten participants of approximately $58,770.14 locked in the 401(k) Plan account,” the complaint states. “As a result, the 401(k) Plan has no fiduciary to authorize American Funds Service Company, who controls the 401(k) Plan’s assets, to terminate the 401(k) Plan or distribute the 401(k) Plan’s assets to its participants.”

Infinisys Inc., the 401(k) plan sponsor and administrator, was incorporated in Arizona in 1983 but has been inactive since 1997, the court records show. Despite repeated attempts by the DOL to contact Hauptmann, he has not responded, according to the lawsuit.  

According to the complaint, the DOL has repeatedly attempted to call Hauptmann at different phone numbers listed as his “contact information on public records, left multiple voicemail messages with these phone numbers, and mailed a letter to his last known address on or about May 11, 2022,” but Hauptmann has not responded to any of these communications, “effectively abandoning the 401(k) Plan.”

The DOL’s Employee Benefits Security Administration is aware of at least one former employee who has requested their funds, according to the complaint.  

The DOL’s complaint asks the court to appoint a new independent fiduciary for the 401(k) plan and enforce provisions of the Employee Retirement Income Security Act.

This is the fourth separate enforcement lawsuit brought against retirement profit-sharing plans in 2023 by the DOL. Two of the previous lawsuits made substantially similar allegations that the plan sponsor abandoned responsibility for the plan by locking up employees’ savings earmarked for retirement.

A request for comment to Hauptmann was not returned, and no website or working phone number for Infinisys could be found. The DOL did not respond to a request for comment.   

The DOL is represented by U.S. Solicitor of Labor Seema Nanda, along with Rachel Uemoto, Marc Pilotin and Laura Bremer.