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EBSA News Release: [03/15/2004] Contact Name: Gloria
Della Phone Number: (202) 693-8666
Labor Department Obtains $2.4 Million Judgment Against
Union Labor Life Insurance Co. and Investment Manager
WASHINGTONThe U. S. Department of Labor has obtained a
consent judgment requiring Washington, D.C.-based Trust Fund Advisors (TFA) and
Union Labor Life Insurance Co. to pay $2.4 million in restitution to two
Laborers International Union pension funds and civil penalties to the Labor
Department.
This Administration has a strong track record in protecting the
benefits promised to Americas workers, and last year we achieved record
monetary results totaling $1.4 billion for retirement, 401(k), health and other
programs, said U.S. Labor Secretary Elaine L. Chao. The Labor
Departments legal actions in the Union Labor Life Insurance case will
restore lost assets to thousands of union workers and make clear that those who
manage union funds cannot ignore their fiduciary responsibilities.
The Labor Department 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
alleges that Union Labor Life Insurance 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 International Unionthe National Industrial Pension Fund and the
Local Union and District Council Pension Fund. TFA hired Union Labor Life
Insurance 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 federal district court in Washington, D.C.,
resulted from an investigation conducted by the Philadelphia regional office of
the departments Employee Benefits Security Administration.
(Chao v. Trust Fund Advisors)
Civil Action No. 02-00559
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