The U.S. Dept. of Labor has obtained a consent judgment requiring Wash., D.C.-based Trust Fund Advisors (TFA) and Union Labor Life Insurance Co. to pay $2.4 million in restitution to two Laborers pension funds and civil penalties to the Labor Department. “The Labor Department’s legal actions in the Union Labor Life Insurance case will restore lost assets to thousands of union workers,” said Secy. of Labor Elaine Chao, “and make clear that those who manage union funds cannot ignore their fiduciary responsibilities.”
The Labor Dept. sued the defendants on March 22, 2002, for violating the Employee Retirement Income Security Act (ERISA) when they imprudently used pension assets to purchase and develop a 120-acre tract of raw land in North Las Vegas into saleable building lots in 1995. The suit also alleged that ULLICO and TFA failed to properly investigate the merits of the real estate project and, ultimately, abandoned it in 1997 without selling any lots. The funds suffered losses when the property was sold in June 1999 for less than the amount of the investment.
TFA was the investment manager to the two funds sponsored by the Laborers Intl. Union of N. Amer. – the National Industrial Pension Fund and the Local Union and District Council Pension Fund. TFA hired ULLICO as a qualified professional asset manager to handle all real estate investments made on behalf of the funds. The National Industrial Pension Fund covered 46,508 participants and the Local Union and District Council Pension Fund covered 7,106 participants as of January 2002. The funds had cumulative assets in excess of $1.1 billion.
The judgment, filed in the U.S. Dist. Ct. in Wash., D.C., resulted from an investigation
conducted by the Philadelphia regional office of DOL’s Employee Benefits Security Admin. [EBSA, 3/15/04]