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Release Date: 08/07/2001
Release
Number: 122
Contact Name: John M. Chavez
Phone Number: 617.565.2075 |
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Boston, Massachusetts - CPI Financial Services, Inc., and
company president Todd LaScola must repay $1,279,656 to the retirement plan of
IBEW Local 99 under terms of a federal default judgment. U.S. District Judge
Ronald R. Lagueux signed the order July 24, after the company and LaScola
failed to respond to a law suit filed in January by the U.S. Department of
Labor accusing them of misusing plan assets. |
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The department’s suit, alleging violations of
the Employee Retirement Income Security Act (ERISA), resulted from an
investigation by the Boston regional office of the Pension and Welfare Benefits
Administration (PWBA), according to PWBA Regional Director James
Benages. |
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Between August 1996 and December 1998, CPI served as
investment manager to the International Brotherhood of Electrical Workers Local
Union No. 99 Retirement Plan, a multi-employer pension plan covering some 600
workers in and around Rhode Island. The lawsuit alleged that as CPI president,
LaScola invested approximately $5,970,000, over 20 percent the plan’s
total assets, in unregistered, highly risky notes issued by real estate limited
partnerships owned by RBG Management Services, Inc., of Chicago. |
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The suit alleged there was no trading market for
the RBG notes, making the investment a violation of the pension plan’s
investment guidelines. CPI and LaScola received approximately $312,400 in
commissions from RBG Management Services, Inc., as well as $127,652 in
management fees from the plan. |
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Benages noted that, in November 1998, plan trustees
demanded the improper investments be immediately liquidated by CPI and LaScola,
who subsequently returned $5,993,813.20 to the plan. However, that money was
obtained through other allegedly illegal acts by LaScola, for which he is
currently serving a federal prison term. |
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ERISA requires fiduciaries to act prudently and
solely in the interest of plan participants and beneficiaries. The suit charged
the defendants violated the law by causing the plan to earn substantially less
than prudent investments would have earned. “Opportunity losses”
totaled $839,603, according to the Labor Department. |
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The amount ordered to be repaid is the total of
the opportunity losses plus the commissions and management fees. LaScola must
first satisfy his criminal restitution obligations before making these
payments |
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“The defendants’ actions were a totally
unacceptable and illegal misuse of a pension plan’s assets,” Benages
said. He stressed that ERISA protects employee pension and welfare benefit
plans by prohibiting those entrusted with the management of plan assets from
misusing those funds for personal gain. |
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(Chao v. CPI Financial Services, Inc., and Todd
LaScola
Civil Action No. 01047L.) |
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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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