EBSA News Release: [06/11/2013]
Contact Name: Michael D’Aquino or Lindsay Williams
Phone Number: (404) 562-2076 or 2078
Email: D'Aquino.Michael@dol.gov or firstname.lastname@example.org
Release Number: 13-1090-ATL
US Labor Department sues to restore $4.9 million to pension funds of Iowa iron casting foundry and Michigan manufacturer
Fiduciaries of the plans allegedly mishandled retirement funds
LEXINGTON, Ky. The U.S. Department of Labor has filed complaints on behalf of pension plans at Iowa-based foundry Fairfield Casting LLC and Michigan-based manufacturer Fourslides Inc. The suits, filed in U.S. District Court for the Eastern District of Kentucky, allege improper use of pension funds and seek to restore $4.9 million to the defined benefit plans.
The suits follow an investigation by the department's Employee Benefits Security Administration, which found violations of the Employee Retirement Income Security Act, including prohibited use of plan assets for the purchase and lease of company property, prohibited purchase of customer notes from affiliated companies, prohibited transfer of assets in favor of a party-in-interest, payment of excessive fees to services providers, payment of fees on behalf of the companies, and failure to provide an updated summary plan description to participants.
"Pension plans exist to help those who have worked and saved to remain secure long after they leave the workforce. Those entrusted with looking after workers' retirement savings are held to the highest standards, and this department will hold them accountable when they violate that trust," acting Secretary of Labor Seth D. Harris said.
The lawsuits name George S. Hofmeister, trustee of the Revstone Casting Fairfield GMP Local 359 pension plan and the Fourslides plan; Robert La Courciere and Pamela Babbish, former trustees to Fourslides' pension plan; and Bernard Tew, managing director of investment service provider Bluegrass Investment Management LLC. The suit also names Fairfield Casting LLC, formerly Revstone Casting Fairfield LLC, and Fourslides Inc., as well as Nelson Clemmons and William Tweardy, members of the Investment Committee for the Revstone Casting Fairfield plan.
The suits allege that the defendants engaged in a series of prohibited transactions resulting in the use of approximately $4.9 million from the Revstone Casting Fairfield plan and the Fourslides plan. Fairfield Castings LLC took control of the Revstone plan in December 2010 and began improper use of funds from that plan just days after acquiring the assets of the plan's former sponsor, Dexter Foundry Inc. Improper use of funds from the Fourslides plan began in March 2006 and culminated in a 2009 loan of nearly half that plan's assets for the benefit of a party-in-interest.
In its suits, the department asks the court to order the defendants to correct all prohibited transactions and restore any losses to the plans, including interest resulting from fiduciary breaches, and transfer to the plans all gains resulting from their violations of ERISA. The suits also seek to prohibit the defendants from serving as fiduciaries or service providers in the future to any plan covered by ERISA; permanently enjoin the defendants from violating ERISA, and remove them as fiduciaries of the plans. The suits call for appointment of an independent fiduciary for the plans.
"Those entrusted with managing these pension funds have shown an utter disregard for the workers, who are relying on the money being there for them when they retire," said Phyllis C. Borzi, the assistant secretary of labor who heads the Employee Benefits Security Administration. "Our aim is to make this right for those workers."
Revstone Industries LLC designs, engineers and manufactures components for use in the transportation and heavy truck industries and is located in Lexington. Revstone Industries is a related entity to both Fairfield Casting LLC and Fourslides Inc., which are owned by the Hofmeister children's irrevocable trusts. George Hofmeister serves as the chairman of both Fairfield Castings and Fourslides.
Bluegrass Investment Management LLC serves as investment advisor to the Revstone Casting Fairfield plan and the Fourslides plan, and Bernard Tew serves as managing director of Bluegrass.
As trustees of the Fourslides plans, Robert La Courciere and Pamela Babbish had discretionary authority and control over the plan's assets and participated in the decisions related to the alleged improper asset transfers and fee payments of that plan, according to the suits.
William Tweardy and Nelson Clemmons, members of the Investment Committee for the Revstone Casting Fairfield plan along with Hofmeister, had discretionary authority and control over the plan's assets and participated in the decisions related to the alleged improper investments of that plan, according to the suits.
This case was investigated by EBSA's Cincinnati Regional Office. It is being litigated by the department's Cleveland Regional Solicitor's Office.
Companies and workers can contact EBSA's Cincinnati office at 859-578-4680 or toll-free at 866-444-3272 for help with problems relating to private sector retirement and health plans. For more information, visit http://www.dol.gov/ebsa/.
Harris v. George Hofmeister, et al.
Civil Action File Number 5:13-cv-00156-KSF
Harris v. Robert La Courciere, et al.
Civil Action File Number 5:13-cv-00158-JMH