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Release Date: 03/30/2001
Release
Number: V-366
Contact Name: Sharon Morrissey
Phone Number: 202.219.8921 |
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In a consent order/judgment obtained March 22 by
the U.S. Department of Labor, involving the pension plan of Morsches Lumber,
Inc. of Columbia City, Indiana, plan officials agreed to divest the plan of
certain stock holdings and loans prohibited by federal employee benefit
law. |
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Within 30 days of this order, the company’s
retirement plan and individual defendants Paul J. Morsches, Jr. and Franz
Morsches will divest the plan of its holdings of stock of Morsches Lumber,
Inc., and subsidiaries Builder’s Mart of Goshen, Inc.(BMG) and
Builder’s Mart of Wabash, Inc. (BMW), which will redeem their stock from
the plan at no less than fair market value. |
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The defendants also will divest the plan of
certain loans by selling them to another subsidiary of the parent lumber
company for no less than the full amount of the principal balance owed or
accrued interest due on the loans at the time of the sale. Amounts for both
kinds of divestitures will be determined by the independent appraisal
firm. |
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After these actions are accomplished, Paul and
Franz Morsches, who served as plan trustees, will resign their positions and be
barred permanently from serving in any fiduciary capacity to this plan or to
any other plan covered by the Employee Retirement Income Security Act of 1974
(ERISA). Pursuant to the court order, Morsches Lumber, Inc. will appoint
LaSalle Bank of Chicago as the independent trustee of the plan and Robert W.
Baird & Company of Milwaukee as the independent investment advisor to the
plan. |
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The pension plan reported 110 active participants
and $4.3 million in assets as of December 31, 1999. |
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In its complaint filed simultaneously, the Labor
Department alleged that since at least August 1, 1994, the defendants knew or
should have known they were violating ERISA because the stocks issued by BMG
and by BMW were not qualifying employer securities within the meaning of
Section 407. In addition, the department’s lawsuit said that beginning on
November 15, 1994, and at various times since, Paul and Franz Morsches permitted
plan assets to be invested in loans to construction companies and individuals
without adequate and appropriate investigation about the credit and financial
condition of the borrowers, without developing repayment schedules and, in some
cases, without obtaining adequate collateral for the loans. |
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Allegedly, they also loaned plan assets to
construction companies and individuals who used portions of the plan assets to
purchase goods from the plan sponsor and other parties in interest to the plan.
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In obtaining today’s order, Kenneth Bazar,
regional director of the Chicago Regional Office of the Labor Department’s
Pension and Welfare Benefits Administration, which conducted the investigation,
said, “We want the public to know that the agency is vigilant in
protecting the rights of participants and beneficiaries of private sector
employer-provided pension and welfare plans.” He added that concerned
participants can call his office in Chicago for similar assistance. The
telephone number is 312.353.0900. |
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The consent order/judgment was entered in the
federal district court in Ft. Wayne on March 22. The complaint was filed March
22 in the same court. |
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(Chao v. Paul J. Morsches, Jr., et al
Civil
Action No. 1:01CV0122) |
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U.S. Department of
Labor news releases are accessible on the Internet. The information in this
news release will be made available in alternate format upon request (large
print, Braille, audio tape or disc) from the Central Office for Assistive
Services and Technology. Please specify which news release when placing your
request. Call 202.693.7773 or TTY 202.693.7775. |
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