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Release Date: 05/18/1999
Release Number:
III-99-05-18-041-PGH
Contact Name: Sharon Morrissey
Phone Number:
202.219.8921 |
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The U.S. Department of Labor obtained judgments
against the defendants in a lawsuit it had filed against two former trustees of
a Latrobe, Pa. retirement plan for misusing plan assets. A federal district
court in Pittsburgh entered a default judgment May 17 against former plan
trustee John P. Kokonaski, Jr., who failed to defend himself against the
department’s lawsuit. Kokonaski allegedly used $275,000 of the plan’s
assets for his own living expenses and for the company’s operating
expenses. |
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According to a consent judgment also entered by
the court on May 17, defendant Wayne A. Ludwig, one of the plan trustees,
agreed to pay the plan $19,000 as restitution. Ludwig also was permanently
barred from serving any plan covered by the Employee Retirement Income Security
Act and is subject to a $3,800 fine, payable to the Labor Department, for his
alleged breaches of the federal pension law. |
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In the default judgement, the court ordered
Kokonaski to restore to the Foothills Litho Co. Inc. employee retirement plan
$428,224.59 for the plan’s losses and permanently barred him from serving
as a fiduciary to any benefit plan covered by ERISA. The court also ordered the
plan to set off its losses against Kokonaski’s individual plan account
balance if the losses are not otherwise restored to the plan. |
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Foothills Litho Co., partially owned by Kokonaski
and Ludwig, filed for bankruptcy in 1994 and was liquidated in 1997. The
company sponsored a money purchase pension plan covering 53 participants and
had approximately $514,000 in assets as of 1993. At the department’s
request, Kokonaski resigned his position with the plan in 1998 and an
independent fiduciary, Laurel Trust Company, was appointed to administer the
plan. |
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According to the department’s lawsuit,
between 1990 and 1997, Kokonaski wrote over 180 checks to himself against the
plan’s account totaling almost $200,000 and transferred an additional
$81,000 from the plan to Foothills Litho Co. Kokonaski allegedly signed all of
these checks in his capacity as trustee of the plan, with no loan notes,
payment schedules or security given for these disbursements. The lawsuit notes
that no money was ever returned to the plan. |
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Ludwig allegedly co-signed some of the unlawful
checks written on the plan’s account and failed to make adequate
provisions for the plan to be managed prudently when he retired from the
company in 1992 and resigned from his duties as a plan trustee. |
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The investigation in this lawsuit was conducted by
the department’s Philadelphia Regional Office of the Pension and Welfare
Benefits Administration. |
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Herman v. Foothills Litho Company, Inc.
Civil
Action # 98CV-1376 |
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U.S. Department of
Labor news releases are accessible on the Internet. The information in this
news release will be made available in alternate format upon request (large
print, Braille, audio tape or disc) from the Central Office for Assistive
Services and Technology. Please specify which news release when placing your
request. Call 202.693.7773 or TTY 202.693.7775. |
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