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Charter One of Cleveland and the former chairman
of the predecessor company — Haverfield Corp. — have agreed to a
settlement with the U. S. Department of Labor providing for payment of
$70,000.00 to the participants of the company’s employee stock ownership
plan (ESOP) as restitution for improperly purchasing corporate stock for the
plan at artificially inflated prices.
Money restored to the plan will be allocated to
the individual accounts of all plan participants except defendants Peter
Shimrak and Jacques Pomeroy, formerly the chairman and director of Haverfield
Corp., respectively. Under the settlement, all charges were dismissed against
Pomeroy.
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.
The lawsuit, filed on May 29, alleged that the
defendants violated the Employee Retirement Income Security Act (ERISA) by
purchasing stock of and from the Haverfield Corp. for the ESOP at inflated
prices.
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.
As part of the settlement, a consent order and
judgment was filed on June 17 and entered by the federal district court on June
21 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.
(Herman v. Charter One Financial, Inc.)
Civil
Action No. 1:98CV1247 |
