United Bhd. of Carpenters Local 9’s pension fund in Cheektowaga, N.Y. sued its financial adviser and eight trustees for steering the fund toward bankruptcy. “The fund is currently in financial ruin,” said the complaint filed in U.S. Dist. Court in Buffalo. The pension fund is borrowing from future income to pay monthly benefits that average $737.
Seeking unspecified damages, the suit charges mismanagement by current and past trustees and malpractice by The Segal Co., a N.Y. firm that advised the fund for over ten years. Also named in the suit are current fund trustees Daryl Bodewes, George Ferraro and James Biddle Sr., and past trustees Terence L. Bodewes, James Maloney, Vincente Fetes, Ernest Bouchard and Thomas Herr.
Local 9 held a meeting for members about the problem on Feb. 26. “The shame of this whole thing is, the rank-and-file participants are the people who are going to be hurt,” said Thomas W. Burke, president of Local 9 and chairman of its pension fund. Burke became head of Local 9 last year and filed the suit in Jan. If the fund is terminated, federal insurance would pay a maximum of $458 a month, less than half what many retirees receive.
The fund paid retirees too much in benefits while collecting too little in contributions. Trustees voted to increase benefits almost every year since 1983, even when income fell short of projections. From 1988 to 1997, the fund’s six-figure administrative costs exceeded projections.
An internal probe allegedly found no wrongdoing, Burke said. But some members at the meeting were unconvinced. “I think they schemed it out somehow,” Raymond Mastrangelo. His brother Ralph said, “I think [the money] was misused.” [Buff. News 2/27/00]