EBSA News Release: [07/31/2013]
Contact Name: Michael D’Aquino or Lindsay Williams
Phone Number: (404) 562-2076 or x2078
Email: D'Aquino.Michael@dol.gov or email@example.com
Release Number: 13-1516-ATL
US Labor Department obtains preliminary injunction against Kentucky-based plan fiduciaries, alleging improper use of retirement funds
LEXINGTON, Ky. The U.S. District Court for the Eastern District of Kentucky on July 26 granted in part the U.S. Department of Labor's motion for a preliminary injunction against George S. Hofmeister and Bernard Tew, former fiduciaries of four Lexington-based pension plans: the Hillsdale Salaried, Hillsdale Hourly, Revstone Casting Fairfield GMP Local 359, and Fourslides Inc.
The department previously filed lawsuits in the same court that named Hofmeister and Tew, among others. Hofmeister was the trustee of the four pension plans, and Tew was managing director of their investment service provider, Bluegrass Investment Management LLC. The court's order removes Hofmeister as a fiduciary of the plans and prohibits him from taking any actions with respect to the pensions plans or their assets. Tew resigned as fiduciary of the plans a few days before a hearing regarding the department's motion.
The lawsuits alleged that the defendants engaged in a series of prohibited transactions resulting in the misuse of approximately $12.1 million from the Hillsdale Salaried pension plan, approximately $22.5 million from the Hillsdale Hourly pension plan, approximately $4.4 million from the Revstone Casting Fairfield GMP Local 359 pension plan, and approximately $500,000 from the Fourslides Inc. pension plan. The four plan sponsors are closely affiliated with Lexington-based Revstone Industries LLC and Spara LLC.
"Those entrusted with managing these pension funds have shown an utter disregard for the workers, who are relying on the money for their retirement," 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."
The suits follow an EBSA investigation that found violations of the Employee Retirement Income Security Act, including prohibited loans to related companies, prohibited use of plan assets for the purchase and lease of employer property, prohibited purchase of customer notes from affiliated companies, prohibited transfer of assets in favor of parties-in-interest, payment of excessive fees to services providers, and payment of fees on behalf of the companies.
According to the brief filed on behalf of the department by the Cleveland Regional Solicitor's Office, Hofmeister, Tew and Bluegrass have repeatedly violated ERISA, using nearly $40 million in pension plan assets to benefit themselves or related parties.
The department's investigation of these pension plans revealed a pattern of prohibited transactions involving the use of these plans' assets by Hofmeister, Tew and investment adviser firms. Alleged improper use of the plans' assets began within days or months of Hofmeister assuming control of the pension plans. The department contends that Hofmeister has placed millions of dollars in pension plan assets at risk and has consistently failed to act to protect these assets when required.
The court has appointed Fiduciary Counselors Inc. to administer the four pension plans. Fiduciary Counselors is an investment adviser firm in Washington, D.C., that has extensive experience acting as an independent fiduciary for employee benefit plans.
These cases were investigated by EBSA's Cincinnati Regional Office. They are being litigated by the department's Cleveland Regional Solicitor's Office. Employers 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/.
Perez v. George Hofmeister, et al.
Civil Action File Number 5:12-cv-00250-KKC
Perez v. George Hofmeister, et al.
Civil Action File Number 5:13-cv-00156-KKC
Perez v. Robert La Courciere, et al.
Civil Action File Number 5:13-cv-00158-KKC