EBSA News Release: [02/17/2011]
Contact Name: John M. Chavez
Phone Number: (617) 565-2075
Release Number: 11-0219-BOS
Connecticut court rules pension trustees legally liable to restore misused pension plan assets in response to US Labor Department motion
HARTFORD, Conn. The U.S. District Court for the District of Connecticut in Hartford has ruled that both trustees of the James T. Farrell III Money Purchase Pension Plan in Hartford are liable to restore plan assets, which they misused to pay their personal expenses and operating expenses of Farrell Associates in violation of the Employee Retirement Income Security Act.
The U.S. Department of Labor filed a petition with the court requesting a summary judgment in a lawsuit the department filed in 2008 against James T. Farrell III and his wife, Nancy Farrell. The suit alleged that James Farrell improperly transferred more than $960,000 in plan assets to a bank account in his and Nancy Farrell's names. Both individuals were trustees of and alleged to have violated their fiduciary duties to the pension plan.
During the course of the litigation, the defendants claimed that Nancy Farrell had been removed as a plan trustee before James Farrell transferred the plan assets and therefore was not liable as a fiduciary to the plan. The court has now granted the Labor Department's motion for summary judgment, and found that Nancy Farrell had not been removed as a trustee of the plan and both individuals are legally liable for the restoration of the misused plan assets.
"The transfer of retirement assets for corporate and personal activities jeopardizes the retirement income of workers and will not be tolerated," Phyllis C. Borzi, assistant secretary of the Labor Department's Employee Benefits Security Administration. "We applaud the court's action to hold these trustees accountable as plan fiduciaries who are obligated by law to safeguard the plan's assets."
Farrell Associates is in the business of financial planning and sponsored the plan for four participants. The exact amount that James and Nancy Farrell will be ordered to restore to the plan has yet to be determined.
This legal action resulted from an investigation conducted by EBSA's Boston Regional Office, and the case was litigated by the department's regional solicitor in Boston. Employers and workers can contact the Boston office of EBSA at 617-565-9600 or toll-free at 866-444-3272 for help with any problems relating to private sector pension and health plans. Additional information can be found at http://www.dol.gov/ebsa.
Solis v. James T. Farrell III and Nancy Farrell
Civil Action Number 3:08cv01126-RNC