EBSA News Release: [08/30/2011]
Contact Name: Scott Allen or Rhonda Burke
Phone Number: (312) 353-6976 or x6976
Release Number: 11-1252-CHI
US Labor Department seeks to recover more than $1 million in improper and delinquent loans made from United Employee Benefit Fund in Northbrook, Ill.
NORTHBROOK, Ill. The U.S. Department of Labor has sued the United Employee Benefit Fund in Northbrook and its trustees, David Fensler and Anthony Monaco, following an investigation by the department's Employee Benefits Security Administration that found the defendants violated the Employee Retirement Income Security Act with respect to loans issued from the fund.
"Plan fiduciaries have a special obligation to put the interests of plan participants first, and illegally disbursing and mismanaging plan assets is a violation of that obligation," said EBSA Assistant Secretary Phyllis C. Borzi. "The actions of the trustees in this case not only harmed the integrity of the plan, but threatened the financial welfare of its participants and their beneficiaries."
Fensler and Monaco allegedly approved at least 194 loans from the fund to individual participants between January 1997 and Dec. 31, 2009. Those loans were improper, unsecured and allowed to become delinquent. Forty-two loans had no supporting documentation. In some instances, the loans exceeded 50 percent of the value of the participants' accrued benefit, which is a separate violation of ERISA.
As of Dec. 31, 2009, none of the loans approved by the trustees had been paid back to the fund in full, and only six of the participants had ever made any payments on loans issued to them. Fensler and Monaco allegedly made no effort to enforce the terms of the loan documents or collect payments, in violation of the plan's governing documents and ERISA.
The suit seeks to recover all assets that may be available under the law, which amount to more than $1 million. It also seeks to require Fensler and Monaco to correct the prohibited transactions in which they engaged and to restore to the fund any losses, including lost opportunity costs, resulting from their fiduciary breaches.
"Our legal action underscores the Labor Department's commitment to hold accountable those who are entrusted with the assets of employee benefit plans," said Steve Haugen, EBSA's regional director in Chicago. "We will continue to help workers obtain their rightful benefits when plan fiduciaries violate the law."
The United Employee Benefit Fund was established by the Professional Workers Master Contract Group and the National Production Workers Union Local 707 to provide welfare, medical, death, disability and child care facility benefits to the fund's participants. As of Dec. 31, 2009, the fund had approximately 281 participants.
The case is being litigated by the department's Regional Solicitor's Office in Chicago. For help with problems related to private sector retirement and health plans, employers and workers can reach EBSA's Chicago Regional Office at 312-353-0900 or toll-free at 866-444-3272. Additional information can be found at http://www.dol.gov/ebsa/.
Solis v. David Fensler, Anthony Monaco and United Employee Benefit Fund
Civil Action Number: 1:11-cv-06031