RICO Claims in NYLife Case Dismissed

April 4, 2001 (PLANSPONSOR.com) - The US District Court in Philadelphia dismissed significant portions of a lawsuit against New York Life that challenged the investment of employee and agent pension plan assets in the company's proprietary mutual funds.

The court found no evidence of fraud or criminal racketeering and dismissed these claims against the company and plan trustees, according to New York Life.

The suit, brought last June on behalf of former employee James Mehling, alleged that New York Life improperly manipulated assets held in the company’s own pension and 401(k) plans and illegally fired Mehling in an attempt to keep him from blowing the whistle. 

The court has yet to rule on whether New York Life fulfilled its fiduciary responsibilities in managing and investing the pension plan assets, as well as the employment termination claim made by Mehling.

Sprenger & Lang, the firm that has brought similar actions against First Union and SBC Communications, filed the class action suit under ERISA and the Racketeer Influenced and Corrupt Organizations Act (RICO).

Similar to the First Union suit, Sprenger & Lang had alleged that New York Life used funds from employees’ pension and 401(k) plans to create additional MainStay funds. 

First Union reached a tentative settlement last week for $26 million in two class actions alleging misuse of participant assets (see First Union Settles 401(k) Lawsuits ).

– Nevin Adams   editors@plansponsor.com

For more information on the New York Life case see Sprenger & Lang Files Expected Class Action Suit against New York Life and Class or No Class? Sprenger & Lang Targets Another Plan Sponsor .