News Release

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New York Corporation and Owner Ordered to Restore $1.7 Million to Health and Welfare Plan

Archived News Release — Caution: Information may be out of date.

Huntington, New York - New York Small Business Network (NYSBN) and its owner must restore $1,677,502 plus interest to Huntington, New York-based Mutual Employees Benefit Trust (MEBT) under a partial consent order obtained by the U.S. Department of Labor on September 13, 2003. The court order resolves a lawsuit alleging the defendants diverted assets from the health and welfare plan to benefit sham labor unions and corporations.

“The Labor Department will aggressively enforce the law to recover assets slated to pay health benefits promised to American workers and their families,” said U.S. Secretary of Labor Elaine L. Chao. "We hope Congress will soon pass AHP legislation, which will give employers a safe alternative for quality affordable health insurance and provide the department a greater ability to combat this kind of abuse in the future.”

MEBT is a multiple employer welfare arrangement that provided health and other welfare benefits to 1,912 participants. NYSBN is an employer association established to help small businesses obtain discounts on health care and other goods and services. NYSBN recruited participants into MEBT.

Besides the restitution, the order permanently bars NYSBN owner Susan Fisher from serving as a trustee or in any official capacity to any employee benefit plan governed by the Employee Retirement Income Security Act (ERISA).

The department sued the defendants on November 15, 2001, alleging that they and 14 other MEBT trustees diverted more than $2.2 million of MEBT’s assets to sham labor unions and corporations.

On May 4, 2002, the department obtained a preliminary order requiring four of the trustees to resign, barring trustees Leonard and Sharlene Slutsky, Clark Hower, Marketing Motivation Associates, Inc., Netscor, Inc., VCT Financial Services, Inc. and Mutual Association Administrators, Inc. from serving or exercising control over any ERISA-covered plan, and appointing an independent fiduciary to oversee MEBT.The order, entered in the federal district court in Central Islip, New York, resulted from an investigation by the New York Regional Office of the Employee Benefits Security Administration into alleged ERISA violations.

Employers and workers can reach the New York Regional Office at 212.607.8600 or through EBSA’s toll-free number, 1.866.444.EBSA (3272), for help with problems relating to private-sector pension and health plans.

(Chao v. Slutsky)
Civil Action No. 01-7593

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

EBSA News Release: 
10/07/2003
Release Number: 
BOS 2003-268