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Release Date: 03/23/2005
Release Number: 05-232-NAT
Contact Name: Gloria Della
Phone Number: 202.693.8664
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Washington, DC - The U.S. Department of Labor
has obtained settlement agreements providing for restitution of $4,312,063
to 10 pension and health plans in Arizona, Colorado, Minnesota and Ohio
that invested plan assets in risky private placement schemes with Capital
Consultants, LLC. The consent orders also require payment of $862,413 in
civil penalties to the government. |
"Capital
Consultants and plan fiduciaries betrayed the men and women whose benefit
plans they were entrusted with," said U.S. Secretary of Labor Elaine
L. Chao. "The department's legal actions in these cases will restore
more than $4.3 million in lost assets to pay benefits to thousands of
union workers. This Administration has a strong track record in protecting
the benefits promised to America's workers, and last year we achieved
record monetary results totaling $3.1 billion for retirement, 401(k),
health and other programs." |
Capital
Consultants was a registered investment manager that provided investment
services to more than 60 primarily union-sponsored pension and health plan
clients governed by federal employee benefits law. Since April 2002, the
department has sued trustees of 33 union plans in Arizona, California,
Colorado, Idaho, Minnesota, Nevada, Ohio, Oregon, and Utah for authorizing
imprudent investments through Capital Consultants. Based on the efforts of
the Labor Department, its court-appointed receiver, and private
settlements, more than $250 million has been recovered for clients,
including plans, investing with Capital Consultants. |
The
consent orders in the present case bar, for a period of years, two
trustees, who allegedly took gratuities from Capital Consultants, from
serving as fiduciaries or service providers to plans governed by the
Employee Retirement Income Security Act (ERISA). An investment advisor to
one plan agreed to be barred for life. In addition, the orders impose
reforms in the controls and procedures related to investments by the
plans. These changes include specific requirements for selecting and
contracting with investment managers, implementing written investment
guidelines and communicating with plan fiduciaries. The Arizona Sheet
Metal pension plan will receive an additional $575,524 through settlement
of a private lawsuit. |
The settlements resolve eight lawsuits alleging that
the trustees violated ERISA by imprudently authorizing plan assets to be
invested in a series of risky private placement investments managed by
Capital Consultants. The suits contend the trustees failed to adequately
investigate the merits of making the investments on behalf of the plans.
In addition, the trustees did not monitor the investments, and certain
trustees failed to follow their plans’ investment guidelines. |
The
settlements cover more than 25,000 participants and beneficiaries of the:
Electrical Workers Local No. 292 Annuity and Pension Plans of St. Louis
Park, Minnesota in Chao v. Shafranski; Sheet Metal Workers Local Pension
Fund of Akron, Ohio in Chao v. Derreberry; International Brotherhood of
Electrical Workers Local 212 Pension Trust Fund of Cincinnati, Ohio in
Chao v. Bolling; Tri-County Building Trades Health Fund of Austintown,
Ohio in Chao v. Talbott; Sheet Metal Workers Local 9 Health and Welfare
Fund of Denver, Colorado in Chao v. Keating; Arizona Sheet Metal Trade
Trust Fund of Phoenix, Arizona in Chao v. Chacon; the International
Brotherhood of Electrical Workers Local 38 Pension and Health and Welfare
Funds of Valley View, Ohio in Chao v. Chilia; and Operating Engineers
Health and Welfare Trust Fund of Denver, Colorado in Chao v. Brown. These
cases were consolidated in Ohio for pre-trial proceedings in In re:
Capital Consultants, LLC “ERISA” Litigation. The 10 plans had
approximately $811 million in assets as of 2002. |
The
Cincinnati, Kansas City and Los Angeles regional offices of the department’s
Employee Benefits Security Administration conducted the investigations in
these cases. Employers and workers can reach the Cincinnati office at
859.578.4680, the Kansas City office at 816.426.5131 and the Los Angeles
office at 626.229.1000, or call EBSA’s toll–free number,
1.866.444.3272, for help with problems relating to private-sector health
and pension plans. |
(In
re: Capital Consultants, LLC “ERISA” Litigation) Civil Action No. 1:04
CV 35000
(Chao v. Shafranski) Civil Action 1:04 CV 35001
(Chao v. Chilia) Civil Action 1:04 CV 35002
(Chao v. Talbott) Civil Action 1:04 CV 35003
(Chao v. Derreberry) Civil Action 1:04 CV 35004
(Chao v. Bolling) Civil Action 1:04 CV 35005
(Chao v. Keating) Civil Action 1:04 CV 35006
(Chao v. Brown) Civil Action 1:04 CV 35007
(Chao v. Chacon) Civil Action 1:05 CV 35008 |
U.S.
Labor Department news releases are accessible on the Internet at
www.dol.gov. The information in this news release will be made available
in alternate format upon request (large print, Braille, audio tape or
disc) from the COAST office. Please specify which news release when
placing your request at 202.693.7765 or TTY 202.693.7755. The U.S.
Department of Labor is committed to providing America's employers and
employees with easy access to understandable information on how to comply
with its laws and regulations. For more information, please visit
www.dol.gov/compliance. |
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