EBSA News Release: [06/22/2010]
Contact Name: Scott Allen
Phone Number: (312) 353-6976
Release Number: 10-0796-CHI
US Labor Department obtains additional $7.8 million as part of global settlement agreement with AA Capital Partners Inc. and others
CHICAGO The U.S. District Court for the Northern District of Illinois, Eastern Division has approved a global settlement agreement among the U.S. Department of Labor, Chicago-based AA Capital Partners Inc., the court-appointed receiver for AA Capital Partners Inc., pension plan clients of AA Capital Partners Inc. and others, providing for recovery of an additional $7.8 million for the pension plan clients of AA Capital. John Orrechio, the former president of AA Capital Partners, was sentenced to nine years and four months in prison after pleading guilty in a related criminal case to theft of approximately $24.2 million in assets from pension plan clients and wire fraud.
The global settlement also involved Mary Elizabeth Stevens, AA Capital Liquidity Management LLC and other defendants who were alleged to have violated the Employee Retirement Income Security Act. The money will be restored by the investment firm's insurance providers, Indian Harbor Insurance Co. and Federal Insurance Co. In a separate consent order entered into with the Labor Department, the defendants are barred from serving as fiduciaries or service providers to any employee benefit plan subject to ERISA.
Assets restored under the global settlement are in addition to $50 million to be restored by defendant Orecchio under an Aug. 3, 2009, consent judgment obtained by the Labor Department.
In 2006, AA Capital Partners Inc. was placed in receivership pursuant to a complaint filed by the Securities and Exchange Commission. The Labor Department subsequently filed its own complaint alleging, among other things, that AA Capital Partners Inc. misused money intended for pension plan client investments for such purposes as renovation of a horse farm owned by Orecchio; renovation of a strip club operated by Orecchio; and the purchase of a Las Vegas, Nev., condominium in Orecchio's name. In addition, the investment firm improperly charged pension plan clients unauthorized fees and imprudently invested some pension plan assets.
"The Labor Department will not tolerate blatant misuse or mismanagement of pension plan funds and will hold the fiduciaries both financially and criminally responsible for their actions," said Phyllis C. Borzi, assistant secretary of the department's Employee Benefits Security Administration. "This settlement sends a clear message that we will pursue every avenue to hold accountable those who are entrusted with the assets of America's workers."
The case was investigated by EBSA's Chicago Regional Office. The office can be reached at 312-353-0900 or toll-free at 866-444-3272. In fiscal year 2009, EBSA achieved monetary results of $1.3 billion related to pension, 401(k), health and other benefits for millions of American workers and their families.
Additional information can be found at http://www.dol.gov/ebsa/.
Solis v. AA Capital Partners Inc.
Civil Action Number: 08-cv-2029