DOL Sues to Recover Misused Pension Funds

The complaints were filed on behalf of pension plans at Iowa-based foundry Fairfield Casting LLC and Michigan-based manufacturer Fourslides Inc. The suits, filed in U.S. District Court for the Eastern District of Kentucky, allege improper use of pension funds.  

The suits follow an investigation by the DOL’s Employee Benefits Security Administration (EBSA), which found violations of the Employee Retirement Income Security Act (ERISA), including prohibited use of plan assets for the purchase and lease of company property, prohibited purchase of customer notes from affiliated companies, prohibited transfer of assets in favor of a party-in-interest, payment of excessive fees to services providers, payment of fees on behalf of the companies, and failure to provide an updated summary plan description to participants.  

The suits allege that the defendants engaged in a series of prohibited transactions resulting in the use of approximately $4.9 million from the Revstone Casting Fairfield plan and the Fourslides plan. Fairfield Castings LLC took control of the Revstone plan in December 2010 and began improper use of funds from that plan just days after acquiring the assets of the plan’s former sponsor, Dexter Foundry Inc. Improper use of funds from the Fourslides plan began in March 2006 and culminated in a 2009 loan of nearly half that plan’s assets for the benefit of a party-in-interest.  

In its suits, the department asks the court to order the defendants to correct all prohibited transactions and restore any losses to the plans, including interest resulting from fiduciary breaches, and transfer to the plans all gains resulting from their violations of ERISA. The suits also seek to prohibit the defendants from serving as fiduciaries or service providers in the future to any plan covered by ERISA, permanently enjoin the defendants from violating ERISA, and remove them as fiduciaries of the plans. The suits call for appointment of an independent fiduciary for the plans. 

"Those entrusted with managing these pension funds have shown an utter disregard for the workers, who are relying on the money being there for them when they retire," said Phyllis C. Borzi, the assistant secretary of labor who heads the Employee Benefits Security Administration.