CSA 401(K) Plan v. Pension Professionals, Inc.

Levi Carey, the CEO of Computer Software Analysts, Inc. (“CSA”) and a co-trustee of CSA’s 401(k) employee benefit plan (the “Plan”), embezzled funds from the Plan. After the employees learned that their trustee had absconded with the funds, the Plan sued Pension Professionals, Inc. (“PPI”), in district court. The Plan appeals a summary judgment in favor of PPI. We affirm.

FACTUAL & PROCEDURAL BACKGROUND

In July of 1991, PPI was hired by CSA to prepare financial reports and perform other third-party administrative services for the Plan. The terms of the agreement that CSA and PPI entered into (the “Service Agreement”) specified that PPI was to provide its services as a third-party administrator and not as a fiduciary of the Plan. A “fiduciary” and its duties are defined in the Employee Retirement Security Income Act (“ERISA”), 29 U.S.C. §§ 1001 , et seq. Approximately six months into the job, PPI discovered what appeared to be discrepancies between the amount of funds that CSA withheld from employee paychecks for investment in the Plan and the amounts actually deposited in the employee 401(k) retirement accounts. PPI sought to ascertain whether the missing assets were located…