Rhode Island Embezzler Loses Pension Suit

Ex-union pension manager and prison inmate Todd LaScola must repay $1,279,656 to the retirement plan of Int’l Bhd. of Elec. Workers Local 99 in Providence, R.I., under terms of a federal default judgment. U.S. Dist. Judge Ronald R. Lagueux (D.R.I. Reagan) signed the order July 24, after LaScola and his firm, CPI Fin. Servs., Inc., failed to respond to an ERISA suit filed in Jan. by the Dep’t of Labor accusing them of misusing plan assets. DOL’s suit alleged that LaScola invested approximately $5,970,000, over 20% the plan’s total assets, in unregistered, highly risky notes issued by real estate limited partnerships owned by RBG Mgmt. Servs., Inc., of Chicago. Allegedly, there was no trading market for the RBG notes, making the investment a violation of the plan’s guidelines. LaScola received approximately $312,400 in commissions from RBG, as well as $127,652 in management fees from the plan.

In 1998, plan trustees demanded that LaScola immediately liquidate improper investments. He subsequently returned $5,993,800 to the plan, but he obtained that money through other illegal acts, for which he is currently serving a federal prison term. The $1.279 million ordered to be repaid is the total of the opportunity losses, $839,603, plus the commissions and management fees. LaScola must repay his criminal obligations before making these civil payments. He was ordered to repay $8.12 million May after pleading guilty to nine embezzlement and fraud charges. He is serving an eight-year sentence in a medium-security federal prison in Estill, S.C. [PWBA Media Release 8/7/01; Providence J.-Bull. 8/9/01]