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Release Date: 05/29/1998
Release Number:
V-155
Contact Name:GLORIA DELLA
Phone Number:
202.219.8921
Contact Name: JOSEPH R. MENEZ
Phone Number: (606)
578-4680 |
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Haverfield Corp. of Cleveland and certain corporate executives
misused assets of the Haverfield Corp employee stock ownership plan (ESOP) to
purchase company stock for the plan at artificially inflated prices, according
to a lawsuit filed today by the U. S. Department of Labor. |
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Haverfield Corp. was the holding company for Home Bank, FSB until
September 1997 when it was merged with Charter One. Home Bank operated 11
full-service offices throughout northeast Ohio. The ESOP covered 179
employees of Haverfield Corporation and had assets of $2,160,638 as of Dec.
31, 1994. |
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Named in the lawsuit are Charter One (the successor to Haverfield
Corp.), plan trustee and former Haverfield director Jacques Pomeroy, and former
Haverfield chairman Peter Shimrak. The lawsuit alleges that the defendants
violated the Employee Retirement Income Security Act (ERISA) in purchasing
stock of and from the Haverfield Corp. for the ESOP. |
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According to the lawsuit, Haverfield Corp. and Pomeroy committed
the ESOP to purchase between 75,000 and 80,000 shares of Haverfield common
stock in March 1991 over the course of a 30-day period of time. The defendants
also caused the ESOP to purchase 31,625 shares from Shimrak. Purchases of the
stock, which traded on the NASDAQ Exchange, allegedly caused the stock’s
price to artificially rise from approximately $8.50 per share to $11.125 per
share. Prior to the ESOP purchases, the stock traded at $8.375 per share. After
the stock purchases, Haverfield common stock closed at $9 per share on April
30, 1991. |
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The lawsuit seeks a court order to require that the defendants
reimburse the ESOP for all losses with interest which resulted from their
improper actions. It also seeks to require them to return any illegal profits
they received as a result of their fiduciary breaches. |
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The lawsuit was filed on May 29 in federal district court in
Cleveland. This case resulted from an investigation conducted by the Cincinnati
Regional Office of the department’s Pension and Welfare Benefits
Administration into alleged violations of ERISA. |
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(Herman v. Charter One Financial, Inc.)
Civil Action No.
1:98CV1247 |
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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 202.693.7755. |
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