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Release Date: 10/07/1998
Release Number:
V-277
Contact Name: Rita Ford
Phone Number:202.219.8921 |
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The U. S. Department of Labor has obtained a
consent order and judgment that requires Richard May of Arlington Heights,
Ill., to pay more than $14,000 to nine employee benefit plans and permanently
bars him from servicing any employee benefit plan governed by federal pension
law, except where he is a participant in the ERISA-covered plans of his
employer. |
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The consent order and judgment requires May, an
officer of MD Management, Inc., a firm that provides accounting and
administrative services to employee benefit plan clients, to restore a total of
$14,867.08 to the plans. This amount represents monies retained by May
attributable to the plans’ investment in the Stratford Investment Trusts
(Stratford Trusts), investment trusts created by May for the purpose of
facilitating personal loans to individual borrowers. This amount further
represents $7,315.00 in loan origination fees and $7,552.08 in bank account
interest attributable to the plans’ investments in the Stratford Trusts
that was retained by May and not transferred to the plans. The judgment also
prohibits May from creating any future Stratford Trusts or any other investment
trusts similar in nature to the Stratford Trusts. |
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The Department has alleged that, since 1992, May
established approximately 15 Stratford Trusts that resulted in the creation of
approximately 27 personal loans. The plans served as lenders under these
Stratford Trusts in that they funded the proceeds for the loans made. In
connection with the Stratford Trusts, May received a one-time loan origination
fee from the individual borrowers that he failed to pass back to the
plans. |
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The Department further alleges that May maintained
a checking account for the Stratford Trusts in order to facilitate the transfer
of loan proceeds from the employee benefit plan lenders to the individual
borrowers, as well as for making loan payments to the employee benefit plan
lenders. May received all monthly interest earned from the checking account and
then failed to forward the interest on to the employee benefit plans. |
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The case was investigated by the Department’s
Chicago Regional Office of the Pension and Welfare Benefits Administration into
violations of the Employee Retirement Income Security Act (ERISA). |
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The consent order and judgment was entered on Oct.
1 in the federal district court in Chicago. |
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Herman v. May
Civil Action No. 97-C-98993
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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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