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Seattle - The U.S. Department of Labor announced
today that Consent Judgments were signed this week in the United States
District Court for the Western District of Washington, Tacoma, which formalize
negotiated settlements affecting management of the J.D. English Steel Company
Profit Sharing and 401(k) Plan and ordering restitution to the plan for alleged
violations of the Employee Retirement Income Security Act of 1974 (ERISA).
According to John Scanlon, district supervisor for
the Pension and Welfare Benefits Administration here, a civil lawsuit filed May
27, 1999, sought equitable relief for the plan arising from alleged breaches of
fiduciary duty on the part of current plan trustee James H. O'Brien; former
plan trustees William E. Saylor and Raymond A. Johnson; and Agnes Rosenberger,
an officer of J.D. English Steel Company, the now-closed Tacoma business which
sponsored the Plan. All the defendants are Pierce County residents.
The Consent Judgments order the defendants to
restore losses to the plan, including lost opportunity costs, remove current
trustee O’Brien, and appoint an independent fiduciary. Further, the three
trustees are permanently enjoined from serving as a fiduciary or service
provider to any employee benefit plan subject to ERISA, and all four defendants
are permanently enjoined from future violations of ERISA.
The Labor Department’s suit alleged that the
plan trustees caused the plan to make nonperforming real estate loans and
limited partnership investments which were imprudent and not in accordance with
the plan's governing instruments, Scanlon said. The alleged imprudent
investments involved projects formed by J.A. Groce Private Placement, Inc.,
including one which is to be developed by Badger Mountain Partners. Both are
Tacoma concerns. Approximately $533,430 related to these allegedly imprudent
investments will be restored to the plan under the Consent Judgments.
In addition, O'Brien and Rosenberger are alleged
to have engaged in transactions specifically prohibited by ERISA when O'Brien
caused the plan to transfer plan assets to the plan sponsor, to himself, and to
Rosenberger, all of whom were parties in interest to the plan. These prohibited
transactions have also been corrected, with another $214,551 restored to the
plan.
Note to editors: Civil Action File # C99-5295 FDB,
Herman v. O’Brien et al. |
