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Cleveland, Ohio - The U.S. Department of Labor
today sued the trustees of the Cleveland-based Sheet Metal Workers Local
33 pension plan for imprudently investing plan assets in risky private
investments with Capital Consultants LLC (CCL) of Portland, Oregon. The
department’s suit seeks to restore all losses on the investments.
“Hardworking men and women relied on the plan
trustees to protect their union-sponsored pension benefits,” said
Secretary of Labor Elaine L. Chao. “We are going forward with civil
action, on behalf of the workers and retirees, to recover as much as
possible for their pension and health plans.”
The Labor Department’s lawsuit alleges that trustees
Alan Chermak, Ken Castro, Donald Skala Jr., Richard Rohaley and Robert
Finley violated the Employee Retirement Income Security Act by allowing
imprudent and risky investment of plan assets. The pension plan covered
1,376 participants and had $95,871,140 in assets as of April 30, 2003.
Between 1998 and 2000, the trustees allowed $5,750,261
of the plan’s assets to be used by CCL to make loans, even though the
loans violated the plan’s investment guidelines. They also allegedly
allowed the plan to invest more than 10% of its total assets under
management with CCL with a single borrower – Wilshire Credit Corporation
– in violation of the plan’s investment agreement with CCL. The suit
seeks a court order to require that defendants restore to the plans any
losses or forfeit any benefits owed to them under the plan and to
institute new plan procedures and controls relating to plan investments.
Capital Consultants was a registered investment manager
that provided investment services to more than 60 clients, including
union-sponsored pension and health plans governed by federal employee
benefits law. Since 2002, the department has obtained permanent bars
against 32 trustees of 34 union plans in Arizona, California, Colorado,
Idaho, Minnesota, Nevada, Ohio, Oregon, and Utah for authorizing imprudent
investments through Capital Consultants. Through the efforts of the Labor
Department, its court-appointed receiver and private settlements, more
than $290 million has been recovered for clients that invested with
Capital Consultants.
The Cincinnati Regional Office of the Labor
Department’s Employee Benefits Security Administration (EBSA)
investigated this case. The suits were filed in federal district court in
Cleveland. Last year EBSA achieved record monetary results totaling $3.1
billion in retirement, 401(k), health and other benefits for American
workers. Employers and workers can contact the Cincinnati office at
859.578.4680 or EBSA’s toll–free number, 1.866.444.EBSA (3272), for
help with problems relating to private-sector health and pension plans.
(Chao v. Chermak)
Civil Action Docket No. 05cv1935 |
