By Paula Aven Gladych
The U.S. Department of Labor is attempting to recover $4.9 million for defined benefit plan participants of an Iowa iron casting foundry and a Michigan manufacturer.
The DOL’s Employee Benefits Security Administration filed a suit claiming the fiduciaries of the plans had breached their duty after an investigation found numerous purported violations of the Employee Retirement Income Security Act.
Those alleged violations included prohibited use of plan assets for the purchase and lease of company property, prohibited purchase of customer notes from affiliated companies, prohibited transfers of assets in favor of a party-in-interest, payment of excessive fees to service providers, payment of fees on behalf of the companies and failure to provide an updated summary plan description to participants.
The lawsuits name George S. Hofmeister, trustee of the Revstone Casting Fairfield GMP Local 359 pension plan and the Fourslides plan; Robert la Courciere and Pamela Babbish, former trustees to Fourslides’ pension plan; and Bernard Tew, managing director of investment service provider Bluegrass Investment Management LLC.
They also name Fairfield Casting LLC, formerly Revstone Casting Fairfield LLC, and Fourslides Inc., as well as Nelson Clemmons and William Tweardy, members of the Investment Committee for the Revstone Casting Fairfield plan.
The suits allege that the defendants engaged in a series of prohibited transactions resulting in the use of about $4.9 million from the Revstone Casting Fairfield plan and the Fourslides plan. Fairfield Castings LLC took control of the Revstone plan in December 2010, and began improper use of funds from that plan just days after acquiring the assets of the plan's former sponsor, Dexter Foundry Inc.
Improper use of funds from the Fourslides plan began in March 2006 and culminated in a 2009 loan of nearly half that plan's assets for the benefit of a party-in-interest, according to the government's case.
The DOL asks the court to order the defendants to correct all prohibited transactions and restore any losses to the plans, including interest resulting from fiduciary breaches, and transfer to the plans all gains resulting from their violations of ERISA
The suits also seek to prohibit the defendants from serving as fiduciaries or service providers in the future to any plan covered by ERISA; permanently enjoin the defendants from violating ERISA, and remove them as fiduciaries of the plans. The suits call for appointment of an independent fiduciary for the plans.
"Those entrusted with managing these pension funds have shown an utter disregard for the workers, who are relying on the money being there for them when they retire," said Phyllis Borzi, the assistant secretary of labor who heads the Employee Benefits Security Administration. "Our aim is to make this right for those workers."
Originally published on BenefitsPro.com