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As the result of a lawsuit filed by the U.S.
Department of Labor, the International Brotherhood of Electrical Workers
Local Union No. 99, based in Cranston, Rhode Island, and members of the
Board of Trustees of the union’s Joint Apprenticeship and Training
Committee Trust have agreed to restore a total of $246,700.66 to the
trust (which is considered to be an employee benefit plan under federal
law).
According to James Benages, New England regional
director of the Labor Department’s Pension and Welfare Benefits
Administration, an investigation by his agency into possible violations of the
Employee Retirement Income Security Act (ERISA) led to the filing of the
Department’s lawsuit. ERISA protects and governs the administration of
employee benefit plans such as pension plans, 401(k) plans, employer provided
health insurance plans, and the like. In this case, the trust was created in
cooperation with employers to train apprentices for the electrical trade and to
provide training programs for journeyman electricians to meet industry demands.
Named as defendants in the suit were the union
itself and members of the Board of Trustees for the Joint Apprenticeship and
Training Committee Trust, including: Carmine Gelsomino, William Lepore, Jr.,
Walter L. Perry, Jr., John Vinnitti, Patrick Brady, Arthur Watson, Raymond
Lambert, Mary Germershausen, and G. Thomas Chabot. Richard Irace, director of
the trust, was named in the suit as well. The directors and trustees, as well
as the union, are parties in interest to the trust under ERISA.
The suit alleged that the trustees and directors
attended out of state conferences and authorized payment with plan assets of
travel stipends to themselves without any consideration of the actual expenses
and without any accounting or receipts for same. The suit also alleged that the
trustees caused or permitted the plan to rent office space in the Local Union
No. 99 union hall without a valid lease, and to pay rent in excess of
reasonable compensation for the space.
As a result of this conduct, the suit alleged that
the trustees failed to discharge their duties with respect to the plan solely
in the interest of the participants and beneficiaries of the plan; and that
they engaged in transactions which constituted a transfer of plan assets to
parties in interest to the plan, namely themselves. This type of conduct is
expressly prohibited under ERISA.
The Department’s lawsuit has been resolved,
for the most part, with the signing of a partial consent judgment and order by
U.S. District Court Chief Justice Ronald R. Lagueux on August 20, 1999. The
Union and all of the individual defendants (except for the estate of Carmine
Gelsomino) have agreed to entry of the judgment, which permanently enjoins
defendants William Lepore, Jr., Walter L. Perry, Jr., John Vinnitti, Patrick
Brady, Arthur Watson, Raymond Lambert, and Mary Germershausen from future
violations of ERISA.
Defendants Richard Irace and the International
Brotherhood of Electrical Workers Local Union No. 99 are also enjoined from
engaging or participating in any violation of the law. Within thirty days of
the entry of the judgment, the defendants must pay the following amounts to the
Local 99 Joint Apprenticeship and Training Committee Trust:
| IBEW Local No. 99 |
|
$125,061.35 |
| William Lepore, Jr. |
|
$14,377.59 |
| John Vinnitti |
|
$10,545.00 |
| Richard Irace |
|
$38,731.68 |
| Arthur Watson |
|
$10,895.59 |
| Raymond Lambert |
|
$17,687.96 |
| Walter Perry |
|
$15,023.90 |
| G. Thomas Chabot |
|
$14,377.59 |
|
|
|
| GRAND TOTAL: |
|
$246,700.66 |
Said Benages, “Those institutions and
individuals holding positions of trust with respect to employee benefit plans
of any kind must be aware of their responsibilities under the law. Plan funds
must be used only for the benefit of participants and beneficiaries, not for
the benefit of those administering the plan. Misuse of plan funds for any other
purpose will not be tolerated.”
The Pension and Welfare Benefits Administration
office is located in the John F. Kennedy Federal Building in Boston. The phone
number is 617-565-9600. The civil action file number for this case is 99-361
L. |
