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Release Date: June 25, 2008
Release Number: 08-764-BOS/BOS 2008-183
Contact Name: John M. Chavez
Phone Number: 617.565.2075

Trustees of Queens, New York union benefit plans ordered to pay $250,000 to resolve U.S. Labor Department lawsuit

New York – Trustees of the welfare, annuity and pension funds of the Material Yard Workers Local 1175, Laborers International Union of North America (LIUNA), Howard Beach, New York, must restore approximately $227,000 to the plans and pay nearly $23,000 in civil monetary penalties, according to a consent judgment obtained by the U.S. Department of Labor.

“Benefit plan assets cannot be used to pay salaries, fees or expenses unrelated to the operations of the plan,” said Bradford P. Campbell, assistant secretary of the Labor Department’s Employee Benefits Security Administration (EBSA). “This judgment rightfully restores $227,000 to the plans that workers and their families rely on for their retirement and other benefits.”

The defendants allegedly violated the Employee Retirement Income Security Act (ERISA) by using plan funds to pay salaries and other expenses not directly related to the operation of the plans. Named as defendants in the department’s lawsuit were trustees Fred Clemenza, Anthony Ferrari, Frank Castiglione and Richard Grace. Also named in the suit were the Material Yard Workers Local 1175 LIUNA Pension, Welfare and Annuity Funds, and Local 1175 Pension Fund Building Holding Corp.

The trustees allegedly caused the funds to pay a portion of the salaries and severance pay of two union employees and to pay credit card charges of one defendant and a union employee, without proof that the funds were obligated for the charges.

The judgment, entered in the U.S. District Court for the Eastern District of New York, orders the defendants to make restitution to the funds and pay the civil penalty to the Labor Department. In addition, trustees Clemenza and Castiglione are permanently barred from serving in a fiduciary capacity or as service providers to any plan governed by ERISA. Ferrari is barred from such positions for five years while Grace is enjoined for a period of two years.

The suit resulted from an investigation by EBSA’s New York Regional Office. Employers and workers can reach EBSA at 212.607.8600 or toll-free at 866.444.3272 for help with problems relating to private sector retirement and health plans. In fiscal year 2007, EBSA achieved monetary results of $1.5 billion related to pension, 401(k), health and other benefits for millions of American workers and their families. For more information, visit www.dol.gov/ebsa.

Chao v Clemenza
Civil Action Number: 06-CV-2877

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