EBSA News Release: [12/13/2010]
Contact Name: Gloria Della
Phone Number: (202) 693-8666
Release Number: 10-1680-NAT
US Department of Labor obtains court order against Georgia investment firm and owner to restore more than $1 million to plumbersí pension plan
WASHINGTON The U.S. Department of Labor has obtained a consent order requiring C.S. Capital Management Inc. of Atlanta, Ga., and owner Paul H. Saylor to restore $1,090,000 to the Plumbers and Pipefitters National Pension Plan as restitution for improperly investing $25 million in risky private placement bonds. The firm also was ordered to pay $109,990.91 in fines to the federal government.
C.S. Capital Management, formerly known as Chadwick, Saylor & Co., is an investment firm hired by the plan to evaluate and make a recommendation on the purchase of bonds that financed the Playa Vista development project in Los Angeles, Calif. The plan covers more than 123,000 participants nationwide.
A lawsuit brought by the Labor Department, filed simultaneously with the order in the U.S. District Court for the Northern District of Virginia in Alexandria, alleges that Saylor and the firm violated the Employee Retirement Income Security Act by making the decision to purchase Playa Vista B bonds for the plan and purchasing the bonds on Nov. 9, 1998. According to the suit, the bond issuer paid one interest payment to the plan in 2001 and has not made any interest or principal payments since. The suit also alleges the defendants acted imprudently by purchasing bonds with an unduly low rate of return compared to the risk assumed by the plan and by purchasing bonds that subordinated the plan's investment to that of Playa Vista A bondholders. As a result, it was less likely that the plan would recover its investment and interest.
"These defendants violated their duty to responsibly manage the plan's investments," said Secretary of Labor Hilda L. Solis. "Our goal is to return money improperly managed and invested so it can be available to pay pension benefits."
Employers and workers can reach the Labor Department's Employee Benefits Security Administration's Washington District Office at 202-693-8700 or toll-free at 866-444-3272 for help with problems relating to private sector retirement and health plans. Additional information can be found at http://www.dol.gov/ebsa/.
Solis v. Saylor
Civil Action Number: 1:10CV1380