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Release Date: 05/24/2001
Release Number: 2001-065
Contact Name: John M. Chavez
Phone Number: 617.565.2075
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Boston, Massachusetts - Two owners of a
Norwood-based real estate development and construction company have been
prohibited for the next ten years from holding positions of responsibility
with any pension or employee benefit plan by a May 15, 2001, consent
judgment issued by the U.S. District Court for Massachusetts to settle a
lawsuit filed by the U.S. Department of Labor. The judgment also
prohibits the defendants from future violations of the federal law that
protects private employee pension and welfare benefit plans. |
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In its suit, filed May 11, 2001, the Labor Department
charged S. Robert Wolf and Frederick Greatorex, both of whom were
officers, directors and principals of Wolf Construction Corporation of 725
Canton Street, Norwood, with violating the Employee Retirement Income
Security Act (ERISA). During the period covered by the lawsuit, November
11, 1993, to the present, the company employed over 30 workers. Most were
participants in the company-sponsored 401(k) plan, known as the Wolf
Construction Corporation Profit Sharing Plan and Trust. |
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The suit charged that the defendants, who were trustees
and fiduciaries of the 401(k) plan, caused the plan to make unsecured
loans totaling $1,422,000 to several companies in which both defendants
had controlling and/or ownership interests. In particular, the suit noted
that an unsecured loan of $300,000 by the plan to 1401 The Reservoir, LLC,
a Massachusetts limited liability corporation of which Frederick Greatorex
was fifty percent owner, constituted an illegal extension of credit
between the plan and a party in interest, as well as the transfer of plan
assets to a party in interest. |
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ERISA requires that employee benefit plan assets be
used and invested solely for the benefit of the plan’s participants,
according to James Benages, regional director in Boston for the Labor
Department’s Pension and Welfare Benefits Administration, which
administers ERISA. The law specifically prohibits the use of plan assets
for the benefit of any party in interest (related party) with respect to
the plan. |
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Even though the unsecured loans were repaid with
interest between January 13, 1995, and December 28, 1999, the
department’s suit alleged that the actions by the defendants consisted
of the use of plan assets for the benefit of parties in interest with
respect to the plan, including dealing with the assets of the plan in
their own interest and for their own account. The suit also charged that
the defendants acted on behalf of parties whose interests were adverse to
the interests of the plan and the interests of the participants and
beneficiaries of the plan. |
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The consent judgment, signed by U.S. District Judge Rya
W. Zobel, resolved the Labor Department’s suit, with the defendants’
agreement to entry of the judgment while neither admitting nor denying the
department’s allegations. The order permanently enjoins them from future
violations of ERISA, and prohibits them from serving as fiduciaries to any
ERISA-covered plan for 10 years. |
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The Labor Department’s legal action followed an
investigation by the Boston Regional Office of the Pension and Welfare
Benefits Administration. That office is located in Room 575 of the John F.
Kennedy Federal Building in Boston. The telephone number is 617.565.9600. |
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(Chao v. S. Robert Wolf and Frederick Greatorex
Civil Action No. 01-CV-10807-RWZ) |
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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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