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News Release

Labor Department Obtains Court Order Resulting In Restoration Of $1.5 Million To Little Falls, New Jersey, Teamsters' Pension Fund

Archived News Release — Caution: Information may be out of date.

The U.S. Department of Labor obtained a consent judgment and order providing for more than $1.5 million to be restored to the Teamsters Local 125 Retirement Fund in Little Falls, New Jersey.

The consent judgment was agreed to after an earlier decision by the court that granted the Secretary of Labor's motion for summary judgment against trustee defendants Charles V. Giordano, Joseph A. D'Orazio, Peter Hoekendorf, Richard Rabin, and the estate of Albert W. Palm. The consent judgment was part of a global resolution that included the Secretary's action; third-party lawsuits filed by D'Orazio, Rabin and Palm, and separate federal and state court actions that had been initiated by the fund. Each of the trustee defendants, with the exception of Giordano, agreed to the settlement.

In its earlier decision, the court found that the trustee defendants breached their fiduciary responsibilities by permitting the plan to invest $2 million in a loan to Donald J. Clause without conducting an adequate, independent investigation of his ability to repay it. They also failed to review the security on the loan and to pursue steps to collect on the loan after Clause defaulted. At the time the $2 million loan was made, Clause was delinquent in making interest payments due under an earlier loan he received from the plan. Giordano also allegedly received payment from Clause’s son for facilitating the loan.

The consent judgment and order provides for: an immediate payment of $ 1.1 million dollars to the fund from various third-party defendants; the waiver of the pension fund account balances of defendants D'Orazio, Hoekendorf, Rabin and the estate of Palm, and the balance of the $1.5 million settlement amount to be paid, in various amounts, by defendants D'Orazio, Rabin, and the estate of Palm. Non-settling defendant Giordano will continue to be subject to the court's original decision and judgment.

The consent judgment also provides that defendants D'Orazio, Rabin and Hoekendorf will be permanently barred from serving in a fiduciary capacity to any ERISA-covered plan.

The consent order and judgment resulted from an investigation conducted by the New York Regional Office of the Labor Department’s Pension and Welfare Benefits Administration into violations of ERISA. The consent judgment was entered on November 5 in the U.S. district court in Newark.

Herman v. Giordano et al. Civil Action N. 94-5927

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

Contact Name: Rita Ford
Phone Number: 202.219.8921

Employee Benefits Security Administration
November 13, 1998
Release Number