Deals & People February 3, 2009

Great-West Appoints More Regional Sales Directors

Great-West Retirement Services has appointed Thomas R. Mordaunt and Jason C. Smoot as regional sales directors for its 401(k) business.
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Mordaunt and Smoot will work closely with brokers, registered investment advisers (RIAs), consultants, third-party administrators, and wirehouse broker/dealers to support the distribution of Great-West Retirement Services’ 401(k) products in upstate New York, and in northern Virginia and Washington, D.C., respectively.

According to a press release, Mordaunt joins Great-West from John Hancock, where he worked for the past six years as an external wholesaler and was responsible for a similar territory. Smoot previously was with Principal Financial Group for 11 years, working as an external wholesaler and responsible for the northern Virginia and Washington, D.C., markets.

The appointments were in addition to others already named (see “Great-West Continues Focus on 401(k) Advisers, Consultants, TPAs’ and “Great-West Retirement Appoints Two Regional Sales Directors’).

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Compliance February 3, 2009

Judge Holds Employer Liable for Missing Plan Contributions

A federal judge has ruled that the owner of a now-defunct Michigan construction firm is personally liable for $24,900 in unpaid retirement savings contributions for the four years before the company folded.
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U.S. District Judge Patrick J. Duggan of the U.S. District Court for the Eastern District of Michigan made the ruling in a participant lawsuit against LDS Contractors Inc., owned by Frank Donagrandi, who agreed to contribute 10% of plaintiff Paul Safran’s salary to a defined contribution plan.

Duggan ruled in Safran’s favor, after finding that Donagrandi misled participants into thinking LDS was making its required annual contributions despite his responsibilities as a plan fiduciary.

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By not giving Safran complete and accurate information about his plan account when Safran inquired, Donagrandi breached his Employee Retirement Income Security Act (ERISA) fiduciary duties and was, therefore, liable for the unpaid contributions.

According to the opinion, LDS’s business began to decline and no contributions were made to the plan between 2002 and 2006. The court noted that Donagrandi used funds from the plan in his own individual account to pay LDS debts, and that the unpaid contributions were listed as unfunded liabilities on LDS’s books. LDS went out of business in 2006 and the plan was liquidated.

In addition to finding Donagrandi liable to the missing plan contributions from 2002 to 2006, Duggan granted Safran’s request for attorneys’ fees, finding that Donagrandi acted in bad faith.

The case is Safran v. Donagrandi, E.D. Mich., No. 08-12366.

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