According to a U.S. Department of Labor (DoL) announcement, the settlements also include a $975,000 civil penalty and and the imposition of reforms in the plans’ investment controls and procedures. These include requirements for selecting and contracting with investment managers, implementing written investment guidelines, and communicating with plan fiduciaries.
Capital Consultants, LLC provided investment management to more than 60 primarily union-sponsored pension, health, and welfare plan clients, the DoL said. Based on the efforts of the court-appointed receiver and settlement of private suits, the receiver has accumulated more than $250 million. The DoL has filed a total of 19 Capital Consultants suits regarding plans in five states (See Labor Department Sues Trustees Of Union Health Plans ).
The latest settlements resolve five lawsuits alleging that the trustees violated the Employee Retirement Income Security Act (ERISA) by imprudently authorizing plan assets to be invested in a series of risky private placement investments managed by Capital Consultants. The suits alleged that the trustees did not adequately investigate the investments. In addition, the trustees did not monitor the investments and failed to follow the plans’ investment guidelines.
The settlements cover more than 17,000 participants and beneficiaries of the:
- Shopmen’s Iron Workers Health & Welfare Trust Fund and Retirement Plan of Southern California in Pasadena, California in Chao v. Eckert
- Utah Carpenters and Cement Masons Pension Health and Welfare Trust of Salt Lake City, Utah in Chao v. Eyre
- Teamsters Local 533 Health & Welfare Trust Fund and Vacation Savings Trust of Reno, Nevada in Chao v. Martino
- Northern Nevada Laborers Health & Welfare Trust Fund and Pension Fund, and Construction Workers Vacation Savings Plan in Reno, Nevada in Chao v. Rusnak
- The Carpenters Health Insurance Fund, Pension Fund and Savings Plan of Northern Nevada of Reno, Nevada in Chao v. Wiggins .