Textile firms are sued over 401(k) plan
The Labor Department has filed suit against executives of two defunct textile firms, including one in Santa Monica, demanding the return of more than $100,000 in employee contributions to the firms’ 401(k) plan.
The suit, filed in U.S. District Court in New York on Thursday, alleges that Richard Haik and Mitchell Ostrover failed to forward employee contributions and loan repayments to the 401(k) retirement plan for employees of Beverly Trimming Co. of Santa Monica and a sister company, American Fabrics Co. of New York.
The lawsuit covers the period from January 2002 to December 2003. The plan covered 63 employees and 43 retirees.
The suit seeks restitution of principal and interest as well as the appointment of an independent trustee. Labor officials have also asked to remove Haik and Ostrover as plan fiduciaries and to permanently bar them from overseeing retirement accounts governed by the Employee Retirement Income Security Act.
Labor officials could not provide further details Tuesday.
An attorney representing Haik and Ostrover failed to return phone calls.
As part of its “Retirement at Risk” series, the Los Angeles Times reported this month that small-company 401(k) plans were vulnerable to theft because they weren’t subject to annual audits. In addition, only 10% of small-company plan assets or $1 million is insured against theft, whichever is less.
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