Fourth Circuit affirms removal of ERISA fiduciaries

In CHAO v. MALKANI, the Fourth Circuit upheld a court order requiring Information Systems and Networks (ISN), Bethesda, Maryland, and its president to pay more than $700,000 to the firm's pension and profit sharing plans. The payment is restitution for contributions the employer failed to make from 1995 through 2003. Because of transgressions, in 2003 the plan fiduciaries, including company president and plan administrator Roma Malkani, were removed from their positions for violating the Employee Retirement Income Security Act (ERISA). The fiduciaries had attempted to transfer money from the plan to the company as reimbursement for expenses they claimed were incurred from 1994 through 2000.

In affirming the district court, the Fourth Circuit noted that "while ERISA fiduciaries should not be removed lightly, we conclude that defendants' actions --including attempts to raid the plan's assets and deprive employees of vested benefits --constitute an egregious misuse of authority that justified the district court's remedies."