DOL Sues Indiana Fund, $3.4 Million in Violations Alleged

 The Dep’t of Labor filed suit May 24 against the trustees and service providers of the pension, welfare and off-season supplement plans of Int’l Longshoremen’s Ass’n Local 1969 in Portage, Ind., for violations of Employee Retirement Income Security Act of 1974. DOL alleges the trustees authorized multi-million dollar payments to parties-in-interest in connection with two Nev. real estate deals. Named in the suit were trustees Andre Joseph, Raymond Sierra, David Lynch, and Edward Rentz as well as Michael A. Daher, sole owner and investment advisor with Leader in Marketing Fulfillment, Inc. (LMF) and John Sherwood Dunsmoor who had power of attorney over the pension plan account.

Daher and Dunsmoor equally owned Qualified Investment Limited (QIL), a Nev. firm formed in connection with the plans’ investments in real estate. Both were indicted and have already pled guilty to various criminal charges with respect to the plans’ real estate investments. The suit, filed in U.S. Dist. Court for the N. Dist. of Ind., alleges ERISA violations involving loans of $3.475 million by the plans through QIL for a residential development known as Grapevine Villas in Mesquite, Nev. DOL also alleges the plans improperly purchased a parcel of undeveloped property, also in Mesquite, known as the Chardonnay property. DOL alleges that the plans’ investments in these properties violated ERISA, because they involved prohibited transactions between the plans and parties in interest to the plans.

The suit further alleges the trustees breached their responsibilities when they used plan funds to pay union and non-plan expenses. The suit is asking that the trustees be removed from their positions with the plans and permanently barred from serving any ERISA-protected plans. It also seeks to offset the trustees’ own individual plan accounts to help restore the losses to other participants and asks the court to name an independent fiduciary to administer the plans and undo the prohibited transactions. [DOL 5/29/02]