A news release from the Department of Labor’s (DoL) Employee Benefits Security Administration (EBSA) said the money is in restitution for violating the Employee Retirement Income Security Act, according to a consent order and judgment.
The DoL lawsuit, filed in the U.S. District Court for the District of Rhode Island, alleged the defendants connected with the Cranston, Rhode Island-based union misused plan assets of the International Brotherhood of Electrical Workers Local Union No. 99 Retirement Fund, and failed to obtain information sufficient to enable the trustees to prudently evaluate the propriety of the legal bills of the union’s retirement fund, annuity plan, health and welfare trust fund, and the apprenticeship and training trust.
Named as defendants in the suit were current and former trustees John Badessa, Thomas Chabot, Robert Chatterley, Thomas Demers, Allen P. Durand, Ronald Leddy, Peter Leone, Jack Magee, William O’Rourke, John P. Shalvey, Jay Strauss, Arthur Watson and David Wyman.
Since all of the defendants were considered to be parties in interest under the law, several were alleged to have dealt with plan assets for their own benefit or for the benefit of close relatives, the EBSA announcement said. Others were alleged to have violated ERISA by failing to obtain sufficient documentation or justification to properly evaluate the legal bills submitted by the plans’ attorneys, Rodio and Ursillo Ltd. of Providence, Rhode Island.
In addition, some trustees allegedly caused or permitted the retirement plan to pay out over $400,000 in unwarranted pension benefits by improperly allowing Local 99 members to receive pension credits for work at the Millstone Nuclear Power Plant in Connecticut, the DoL alleged.
The judgment orders the defendants to pay the restitution to the Local 99 retirement fund, investigate the qualifications of service providers to the plans, provide the service provider with complete and accurate information, and conduct a prudent and sufficient investigation to ensure that reliance on the service provider’s advice is reasonably justified under the circumstances.
In addition, the defendants must ensure that adequate and accurate records are established and maintained by all service providers to the plans, and the fiduciary defendants are barred from using their authority to pay a fee for a service in which the fiduciary has a personal interest.