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Release Date: 05/17/2002
Release Number: BOS 2002-111
Contact Name: Rita Ford
Phone Number: 202.693.8666
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New York, New York - The U.S. Department of Labor obtained on May 4 a partial consent order
appointing an independent fiduciary to oversee the Huntington, New York-based health
and welfare plan of Mutual Employees Benefit Trust (MEBT) and requiring all four
plan trustees to resign their positions with the plan. |
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“This case
represents a flagrant abuse of plan assets to enrich others to the detriment of
workers and their families,” said Ann L.
Combs, assistant secretary for pension and welfare benefits. “Our action
replaces the trustees with an unbiased third party who will manage and operate
the plan for the benefit of plan participants.” |
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The partial consent order appoints David Silverman as the court-appointed
independent fiduciary to replace the trustees. The independent fiduciary
has authority to oversee the operations of the plan, pay participant claims and
to terminate the plan in an orderly manner, if appropriate. The order also
bars the settling defendants from serving the MEBT plan unless expressly
permitted by the independent fiduciary. |
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Under the terms
of the order, defendants Leonard Slutsky, Clark Hower, Marketing
Motivation Associates, Inc., Netscor, Inc., and VCT Financial Services, Inc.
will not serve as fiduciaries or service providers to any plan governed by the
Employee Retirement Income Security Act (ERISA) subject to resolution of the
department’s suit. The trustees, Sharlene Slutsky and Mutual Association
Administrators, Inc., also are barred from exercising control over the trust or
serving as fiduciaries to any ERISA-covered plan, until this matter is resolved. |
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The department sued the trustees on November 15,
2001, for allegedly diverting more than $2.2 million in MEBT plan assets to
benefit sham labor unions and corporations. Leonard Slutsky is a convicted felon
who allegedly acted as a fiduciary to the MEBT plan. ERISA bars persons
who are convicted on certain criminal charges from serving as fiduciaries to any
plan governed by the federal pension law. Sharlene Slutsky is the owner
and president of MEBT’s third party administrator. Hower is the
owner and president of a sham “employer association” that allegedly received
assets diverted from the MEBT plan. |
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Defendants
signing the order include Leonard Slutsky, his wife Sharlene Slutsky, Hower,
Mutual Association Administrators, Inc. (MAA), Marketing Motivation Associates,
Inc., Netscor, Inc. (Netscor), VCT Financial Services, Inc., and trustees
Leonard Mandelbaum, Tom Perez, Jack Neiman and Adena Samowitz. In
addition, the suit named as defendants Financial Consultant Guild of America and
union locals American Employees Industrial Guild Local 1, American Employees
Industrial Guild Local 2, the New York Small Business Network, Inc. (NYSBN) and
Susan Fisher. |
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MAA, which is owned by Sharlene Slutsky, provided
third-party plan administration services to the plan. MEBT is a multiple
employer welfare arrangement that provided group health and other welfare
benefits to as many as 1,912 participants. Since 1996 the defendants diverted more than $2.2
million in plan assets to the unions, NYSBN and Netscor in the form of sham
union and association fees. The suit also alleges that Leonard Slutsky, who was previously convicted on criminal charges, was allowed to serve
as a fiduciary to MEBT. |
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The partial consent order, entered in
federal district court in Central Islip, New York, resulted from an investigation by
the New York Regional Office of the Pension and Welfare Benefits Administration
into alleged ERISA violations. Employers and workers can contact the
regional office at 212.337.2462 or PWBA's Toll-Free
Employee & Employer Hotline number: 1.866.275.7922,
for help with any problems relating to private-sector pension and health plans. |
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(Chao v. Slutsky
Civil Action No.
01-7593(ADS)(TB)) |
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U.S. Department of Labor
news releases are accessible on the Internet. The information in this news
release will be made available in alternate format upon request (large
print, Braille, audio tape or disc) from the Central Office for Assistive
Services and Technology. Please specify which news release when placing
your request. Call 202.693.7773 or TTY 202.693.7775. |
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