On March 27 the U.S. Dept. of Labor sued the trustees of the pension and welfare plans of Local 2682 of the United Bhd. of Carpenters in Bronx, New York, for improperly using plan assets to pay unreasonable expenses in excess of $900,000. Named as defendants in the lawsuit are current and former trustees Anthony Prezioso, Joseph Cruz, Manuel Dos Santos, Edward Orlando, and Mark Goldsmith. Prezioso was the plan administrator. Cruz was a trustee of the Local 2682 pension and welfare plans and president of Local 2682.
The lawsuit, filed in federal district court in Manhattan, alleges that the trustees of Local 2682’s benefit plans paid the Local 2682 union an unreasonable amount for services unnecessary or not provided to the plans. Specifically, the suit alleges that the trustees:
- failed to terminate building loans of $928,670 from the pension fund to the Local 2682 Building Corp., which is owned by the same trustees. The appraised value of the building was only $775,000:
- The trustees allegedly used pension assets to pay a “no show” employee:
- overcharged the pension and welfare plans for rent and expenses for space in the building housing the funds and the union local:
- paid to lease a car used in part for business unrelated to the plans by plan administrator Anthony Prezioso.
According to the Labor Dept., the officials violated ERISA by:
- failing to run the pension fund in the beneficiaries’ interests [29 U.S.C. Sec. 1104(a)(1)(A)]:
- failing to fulfill their fiduciary duty to the pension beneficiaries [29 U.S.C. Sec. 1104(a)(1)(B) and:
- self-interested financial dealings [29 U.S.C. Sec. 1106(a)(1)(B)].
The labor dept. is seeking to require that the defendants reimburse the plans for losses in excess of $900,000 with interest, to permanently bar Cruz from serving employee benefit plans in the future, to correct any prohibited transactions with the plans, and to offset the defendants’ pension benefits to repay money owed to the pension plan.
The case was investigated the New York Regional Office of the department’s Employee Benefits Security Administration. [EBSA 3/28/03]