Sprenger & Lang Files Expected Class Action Suit against New York Life
The suit, filed in federal district court in Philadelphia, charges New York Life with improperly manipulating the assets of its own pension and 401(k) plans for corporate gain, and illegally firing Mehling in an effort to prevent him from blowing the whistle on the alleged fraudulent scheme.
Scheme alleged
The suit, brought under the Racketeer Influenced and Corrupt Organizations Act (RICO) and the Employee Retirement Income Security Act (ERISA), seeks hundreds of millions of dollars in damages and disgorgement of ill-gotten gains.
The suit alleges a decade-long scheme by New York Life and its top officials to exploit the assets in the plans to help establish the company in the institutional mutual fund business. The suit contends that in 1991 New York Life raided its pension plans and converted hundreds of millions of dollars of the plans’ assets into ‘seed money’ for the new funds, called the ‘MainStay Institutional Funds.’
Sprenger & Lang also claims that in 1994 and 1995 New York Life used hundreds of millions of dollars from employees’ pension and 401(k) plans to create additional MainStay funds. The suit contends that New York Life’s use of plan assets to further its corporate business objectives violated the duties of loyalty and due care that ERISA imposes on plan fiduciaries.
Single claimant
Mehling seeks on behalf of himself damages for the losses he sustained as a result of New York Life’s termination of his employment as a result of its concern that he would blow the whistle on the illegal operation. So far, he is the only claimant in the suit.
The action is filed by three law firms: Sprenger & Lang; Stief, Waite, Gross, Sagoskin & Gilman and Sandals, Langer & Taylor. Sprenger & Lang was also the lead litigator in ERISA-based class action suits against First Union and SBC Communications.
When the threat of a suit first emerged, New York Life told PLANSPONSOR.com it felt confident that it had not violated any laws. About Mehling’s termination, the company said that he was fired for “performance reasons unrelated to the administration of the pension plans.”
For Sprenger & Lang’s Web site dedicated to the suit, go to: www.newyorklifesuit.com