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Release Date: 11/13/1998
Release Number:
NY-216
Contact Name: Rita Ford
Phone Number: 202.219.8921 |
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The U.S. Department of Labor obtained a consent judgment and order
providing for more than $1.5 million to be restored to the Teamsters Local 125
Retirement Fund in Little Falls, New Jersey. |
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The consent judgment was agreed to after an earlier decision by
the court that granted the Secretary of Labor's motion for summary judgment
against trustee defendants Charles V. Giordano, Joseph A. D'Orazio, Peter
Hoekendorf, Richard Rabin, and the estate of Albert W. Palm. The consent
judgment was part of a global resolution that included the Secretary's action;
third-party lawsuits filed by D'Orazio, Rabin and Palm, and separate federal
and state court actions that had been initiated by the fund. Each of the
trustee defendants, with the exception of Giordano, agreed to the
settlement. |
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In its earlier decision, the court found that the trustee
defendants breached their fiduciary responsibilities by permitting the plan to
invest $2 million in a loan to Donald J. Clause without conducting an adequate,
independent investigation of his ability to repay it. They also failed to
review the security on the loan and to pursue steps to collect on the loan
after Clause defaulted. At the time the $2 million loan was made, Clause was
delinquent in making interest payments due under an earlier loan he received
from the plan. Giordano also allegedly received payment from Clause’s son
for facilitating the loan. |
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The consent judgment and order provides for: an immediate payment
of $ 1.1 million dollars to the fund from various third-party defendants; the
waiver of the pension fund account balances of defendants D'Orazio, Hoekendorf,
Rabin and the estate of Palm, and the balance of the $1.5 million settlement
amount to be paid, in various amounts, by defendants D'Orazio, Rabin, and the
estate of Palm. Non-settling defendant Giordano will continue to be subject to
the court's original decision and judgment. |
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The consent judgment also provides that defendants D'Orazio, Rabin
and Hoekendorf will be permanently barred from serving in a fiduciary capacity
to any ERISA-covered plan. |
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The consent order and judgment resulted from an investigation
conducted by the New York Regional Office of the Labor Department’s
Pension and Welfare Benefits Administration into violations of ERISA. The
consent judgment was entered on November 5 in the U.S. district court in
Newark. |
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Herman v. Giordano et al. Civil Action N. 94-5927 |
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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 202.693.7755. |
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