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Release Date: August 27, 2008
Release Number: 08-1227-PHI
Contact Name: Gloria Della/Richard Manning
Phone Number: 202.693.8664/202.693.4676
Philadelphia – The U.S. Department of Labor
has obtained a consent judgment in which the Pennsylvania Builders
Association (PBA), its wholly-owned subsidiary and its trustees agree to
restore $5 million to the fund and pay a civil penalty of $500,000. The
judgment also permanently bars the trustees from using plan assets to
pay royalties and/or licensing fees to the association, prevents the
trustees from contracting with the subsidiary for administrative
services in exchange for fees, and prohibits the use of trust assets for
lobbying purposes. In addition, current and future trustees must receive
eight hours of fiduciary training annually over the next five years.
“This $5 million judgment protects the benefits
plan’s participants by restoring the funds and taking steps to make
sure the plan is managed properly in the future,” said Secretary of
Labor Elaine L. Chao.
The lawsuit being resolved alleged that PBA of
Lemoyne, Pennsylvania; its wholly-owned subsidiary Builders Services
Inc. (BSI); and trustees Robert Basile, Patrick Brewer, Dennis Brislin,
Scott Cannon, James Conner, Brad Elliott, Charles Farrell, Chuck
Hamilton, David Knipe, Gene Kreitzer, Gary Naeser, Michael Rodino, Toni
Rogan, Mack Smith, Chauncey Wirsing, Clarence Yeagley, Jack Zimmer and
Roger Zimmer violated their fiduciary duties to the Pennsylvania
Builders Association Benefits Trust. PBA sponsored the trust, and BSI
was administrator of the trust.
The suit alleges that PBA received royalty payments
and BSI received administrative fees under arrangements with BSI and the
trust’s third party administrators. The royalties paid to PBA
represented a percentage of the administrative fees paid by contributing
employers. The department alleged that these royalty payments were
prohibited because the sponsor had provided its name and endorsement to
the trust when it created and named the trust. The trustees allegedly
misused plan assets to pay royalties to PBA from 2000 to 2007,
administrative fees to BSI from 2000 to 2007 and for political lobbying
from 2002 through 2004.
The trust provided health, life insurance, dental,
vision and temporary disability benefits to 12,616 participants as of
2006.
The court action, filed in the U.S. District Court
for the Middle District of Pennsylvania, resulted from an investigation
conducted by the Washington District Office of the Labor Department’s
Employee Benefits Security Administration (EBSA). Employers and workers
may contact the Washington District Office of the EBSA at 202.693.8700
or toll-free at 866.444.3272 for help with problems relating to private
sector pension and health plans. In fiscal year 2007, EBSA achieved
monetary results of $1.5 billion related to pension, 401(k), health and
other benefits for millions of American workers and their families.
Chao v. Pennsylvania Builders Association
Civil Action Number 1:08-cv-01564-SHR
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placing your request at 202.693.7828 or TTY 202.693.7755. The Labor Department is committed to providing America's employers and
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