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Thomas Buchanan, William Buchanan, and John
Buchanan, trustees of the Northern-Minnesota Wisconsin Area Health Care
Retirement Plans for union and non-union employees of Donjer, Inc. and Buchanan
Nursing Home, Inc. (BNH) in Duluth, Minn., were ordered to terminate the plans
and make distribution of plan assets to plan participants under a consent order
and judgment reached with the U.S. Department of Labor.
The consent order and judgment required the
defendant trustees to terminate the plans and file required financial reports
from 1998 through the year of the plans’ termination. Further, Thomas
Buchanan was required to waive any interest he may have had in $137,168.89
recovered as part of an out-of-court settlement with Norwest Bank Minnesota
North, N.A. (Norwest). An additional $37,602 was also contributed to the plans
from the liquidation of Donjer, Inc. through its bankruptcy proceeding. Prior
to filing of the suit, trustee John Buchanan paid $50,449.50 to the plans for
employees of the BNH.
As part of the out-of-court settlement with
directed trustee Norwest, it has agreed to locate and make distribution to the
109 individual participants affected based on their pro rata share of the
plans’ assets available for distribution.
The court order resulted from a lawsuit filed in
1997 alleging that the trustees violated the Employee Retirement Income
Security Act (ERISA) by, among other things, failing to enforce the collection
of a judgment entered against the plans’ sponsors on behalf of the plans.
The breaches constituted an illegal extension of credit to the Donjer and BNH
corporations, which administered and sponsored the plans. The three defendants
were also directors of the corporations.
The department’s action resulted from an
investigation by the Kansas City Regional Office of the Pension and Welfare
Benefits Administration into violations of ERISA. The consent order and
judgment were entered on Oct. 25, in the U.S. District Court in Duluth, Minn.
Herman v. Buchanan et al
Civil Action No.
97-1821 MJD/RLE |
