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Archived News Release — Caution: Information may be out of date.
U.S. DEPARTMENT OF
LABOR
LABOR DEPARTMENT RECOVERS $7 MILLION FOR HOUSTON
PENSION PLAN
Mon., June 19, 1995
For more information call: (202) 219-8921.
More than $7.4 million has been recovered for the retirement plan of Parker Brothers, Inc. in Houston under a settlement with the U. S. Labor Department, plan trustees, the company and others. The settlement reimburses the plan for losses on loans which depleted its assets.
The settlement imposes a lifetime bar against the trustees and Parker Brothers serving in positions of trust to any pension plan governed by federal pension law. An independent trustee appointed by the court will continue to manage the plan's assets and investments.
At the time of the loans, Parker Brothers produced and sold concrete and construction materials in the Houston area. It sponsored the plan which currently has more than 600 participants.
"The settlement restores the financial viability of the plan to resume paying benefits owed to workers and retirees," said Secretary of Labor Robert B. Reich. "Hundreds of workers have been denied benefit payments since 1990 because the loans drained money needed to pay workers."
The settlement resolves a lawsuit by the Labor Department and partially settles a class action suit brought by the participants which alleged similar claims. The settling defendants are the trustees, Parker Brothers, former plan attorneys Bracewell & Patterson, LLP, and two corporate customers.
Between 1985 and 1987, the trustees allegedly invested more than $7.1 million of plan money in highly speculative loans to five Texas companies or individuals. The loans concentrated a substantial portion of plan assets in loans secured by land located in two counties near Houston. The loans and the land obtained through foreclosure of the loans allegedly were not valued annually at fair market value.
The trustees also were alleged to have failed to establish reasonable repayment terms for the loans and to timely demand repayment after default. By 1991, more than $6 million of the loans were in default. In addition, Parker Brothers and its shareholders allegedly benefitted from four loans made to customers of the company.
In 1992, the trustees agreed to a consent order removing them from their positions with the plan and appointing an independent trustee to manage the plan until the legal action is concluded.
The settlement was entered after a June 16 hearing in federal district court in Houston.
Archived News Release — Caution: Information may be out of date.
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