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Release Date: 08/23/2002
Release Number: 318
Contact Name: Sharon Morrissey
Phone Number: 202.693.8664
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Chicago, Illinois - The U.S. Department of Labor has obtained a consent judgment
requiring Automatic Ice, Inc. of Chicago and its profit sharing plan’s trustee
to repay $69,438 to the plan. The trustee Daniel S. Mahru also agreed in the
consent judgment that he will not serve as a plan fiduciary in the future. |
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“The department is vigorously pursuing violations of the law to ensure that
plan assets are protected and available to pay future benefits to workers,”
said Kenneth Bazar, director of the department’s Chicago regional office of
the Pension and Welfare Benefits Administration, which investigated the case. |
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The Labor Department sued the defendants on November 27, 2001, for violating the
Employee Retirement Income Security Act (ERISA) by investing nearly two-thirds
of plan assets in future fast food restaurants through Rezko Concessions, an
Illinois corporation. |
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According to the suit, Mahru invested $75,000 of the plan’s assets in 1995
with Rezko Concessions, receiving in return a letter from Rezko saying the money
would be converted to stock in future Rezko Corporations which would own and
operate fast food restaurants. Although the letter guaranteed a 20 percent
profit annually through 2000 if the future corporations were not formed by then,
to date the Rezko investment has not paid the plan the guaranteed returns. The
suit alleged that Mahru and the plan failed to collect on the debt owed by Rezko. |
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Of the plan assets liquidated to fund the Rezko investment, an additional
$8,415 was deposited in one of Automatic Ice’s own accounts and never
transferred to the plan’s account. |
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As of December 31, 1998, there were 19 participants in the plan, which had assets
totaling $112,094. |
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Employers and workers can contact the regional office at
312.353.0900 or PWBA’s Toll-Free Employee & Employer Hotline number,
1.866.275.7922 for help with problems relating to private-sector pension and
health plans. The consent judgment was entered July 31, 2002, in federal
district court in the Northern District of Illinois, Eastern Division, in
Chicago. |
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(Chao v. Automatic Ice, Inc. and Daniel S. Mahru
Civil Action No. 01 C9109) |
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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. |
