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News Release

Labor Department Recovers Assets for Pension Plan Of Chicago Ice Machine Company

Archived News Release — Caution: Information may be out of date.

Chicago, Illinois - The U.S. Department of Labor has obtained a consent judgment requiring Automatic Ice, Inc. of Chicago and its profit sharing plan’s trustee to repay $69,438 to the plan. The trustee Daniel S. Mahru also agreed in the consent judgment that he will not serve as a plan fiduciary in the future.

“The department is vigorously pursuing violations of the law to ensure that plan assets are protected and available to pay future benefits to workers,” said Kenneth Bazar, director of the department’s Chicago regional office of the Pension and Welfare Benefits Administration, which investigated the case.

The Labor Department sued the defendants on November 27, 2001, for violating the Employee Retirement Income Security Act (ERISA) by investing nearly two-thirds of plan assets in future fast food restaurants through Rezko Concessions, an Illinois corporation.

According to the suit, Mahru invested $75,000 of the plan’s assets in 1995 with Rezko Concessions, receiving in return a letter from Rezko saying the money would be converted to stock in future Rezko Corporations which would own and operate fast food restaurants. Although the letter guaranteed a 20 percent profit annually through 2000 if the future corporations were not formed by then, to date the Rezko investment has not paid the plan the guaranteed returns. The suit alleged that Mahru and the plan failed to collect on the debt owed by Rezko.

Of the plan assets liquidated to fund the Rezko investment, an additional $8,415 was deposited in one of Automatic Ice’s own accounts and never transferred to the plan’s account.

As of December 31, 1998, there were 19 participants in the plan, which had assets totaling $112,094.

Employers and workers can contact the regional office at 312.353.0900 or PWBA’s Toll-Free Employee & Employer Hotline number, 1.866.275.7922 for help with problems relating to private-sector pension and health plans. The consent judgment was entered July 31, 2002, in federal district court in the Northern District of Illinois, Eastern Division, in Chicago.

(Chao v. Automatic Ice, Inc. and Daniel S. Mahru
Civil Action No. 01 C9109)

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Archived News Release — Caution: Information may be out of date.

Employee Benefits Security Administration
August 23, 2002
Release Number