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News Release

Ohio Bank And Executives Sued For Misusing ESOP Assets

Archived News Release — Caution: Information may be out of date.

Haverfield Corp. of Cleveland and certain corporate executives misused assets of the Haverfield Corp employee stock ownership plan (ESOP) to purchase company stock for the plan at artificially inflated prices, according to a lawsuit filed today by the U. S. Department of Labor.

Haverfield Corp. was the holding company for Home Bank, FSB until September 1997 when it was merged with Charter One. Home Bank operated 11 full-service offices throughout northeast Ohio. The ESOP covered 179 employees of Haverfield Corporation and had assets of $2,160,638 as of Dec. 31, 1994.

Named in the lawsuit are Charter One (the successor to Haverfield Corp.), plan trustee and former Haverfield director Jacques Pomeroy, and former Haverfield chairman Peter Shimrak. The lawsuit alleges that the defendants violated the Employee Retirement Income Security Act (ERISA) in purchasing stock of and from the Haverfield Corp. for the ESOP.

According to the lawsuit, Haverfield Corp. and Pomeroy committed the ESOP to purchase between 75,000 and 80,000 shares of Haverfield common stock in March 1991 over the course of a 30-day period of time. The defendants also caused the ESOP to purchase 31,625 shares from Shimrak. Purchases of the stock, which traded on the NASDAQ Exchange, allegedly caused the stock’s price to artificially rise from approximately $8.50 per share to $11.125 per share. Prior to the ESOP purchases, the stock traded at $8.375 per share. After the stock purchases, Haverfield common stock closed at $9 per share on April 30, 1991.

The lawsuit seeks a court order to require that the defendants reimburse the ESOP for all losses with interest which resulted from their improper actions. It also seeks to require them to return any illegal profits they received as a result of their fiduciary breaches.

The lawsuit was filed on May 29 in federal district court in Cleveland. This case resulted from an investigation conducted by the Cincinnati Regional Office of the department’s Pension and Welfare Benefits Administration into alleged violations of ERISA.

(Herman v. Charter One Financial, Inc.)
Civil Action No. 1:98CV1247

U.S. Department of Labor news releases are accessible on the Internet. The information in this news release will be made available in alternate format upon request (large print, Braille, audio tape or disc) from the Central Office for Assistive Services and Technology. Please specify which news release when placing your request. Call 202.693.7773 or TTY 202.693.7755.

Archived News Release — Caution: Information may be out of date.

Phone Number: 202.219.8921

Contact Name: JOSEPH R. MENEZ
Phone Number: (606) 578-4680

Employee Benefits Security Administration
May 29, 1998
Release Number