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EBSA News Release: [08/03/2004]
Contact Name: Gloria
Della
Phone Number: (202) 693-8664
Labor Department Removes Plumbers’ Union Pension
Fund Trustees, Collects $10.98 Million for Worker Retirement
WASHINGTON—The U.S. Department of Labor filed a consent
order on Aug. 2, 2004, ousting four trustees from the board of the Plumbers and
Pipefitters National Pension Fund and requiring them to pay $10.98 million in
restitution and civil penalties in connection with the imprudent management of
the fund’s investment in the Diplomat Resort and Country Club in
Hollywood, Fla.
“The Plumbers trustees mismanaged the investment and placed the
retirement benefits of thousands of union workers at risk,” said U.S.
Secretary of Labor Elaine L. Chao. “Our legal action recovered nearly $10
million for workers in the Plumbers pension plan. Last year, the Administration
achieved record monetary results recovering a total of $1.4 billion for
retirement, 401(k), health and other programs.”
The settlement resolves allegations against pension trustees Martin J.
Maddaloni, President of the United Association of Journeymen and Apprentices of
the Plumbing and Pipefitters Industry of the United States and Canada; Thomas
Patchell, General Secretary-Treasurer of the Plumbers union; Charles H.
Carlson, former Chairman of Industrial Piping Company; James A. House, part
owner of, J.A. House, Inc., a bankrupt refrigerant manufacturing corporation;
and Patrick Perno, administrative assistant to the general president of the
Plumbers union. In addition to paying restitution, Maddaloni and Patchell have
permanently resigned their positions as trustees for the fund and the six other
ERISA-covered plans they currently serve as fiduciaries. Carlson and House have
resigned permanently as trustees. Perno, who became a trustee after the project
was initiated, may continue to serve as a trustee of the fund, but will recuse
himself from any decision concerning the investment of the assets until Dec.
31, 2006. The federal district court in Ft. Lauderdale, Fla. must approve the
settlement.
The Labor Department sued the trustees in September 2002 for violating
the Employee Retirement Income Security Act (ERISA) when they imprudently
proceeded with the Diplomat project without conducting the analysis required to
make an informed decision. The suit also alleged that the trustees failed to
maintain adequate financial controls over construction costs and paid excessive
fees to service providers on the project. Additional funds also have been
recovered for the plan by Independent Fiduciary Services, Inc., (IFS), an
independent fiduciary appointed in 2000 pursuant to an agreement with the
Secretary. That agreement appointed an independent fiduciary to manage the
Diplomat project. IFS is continuing to pursue additional claims against
subcontractors and service providers involved in the Diplomat project.
The settlement resulted from an investigation conducted by the Atlanta
regional office of the Employee Benefits Security Administration (EBSA).
Employers and workers can contact a regional EBSA office at its toll free
number, 1-866-444-3272, for help with any problems relating to
private-sector pension and health plans.
(Chao v. Maddaloni)
Civil Action No. 02-61289CIV
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