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Release Date: 12/18/2001
Release Number: 02-2
Contact Name: Rita Ford
Phone Number: 202.693.8671
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New York, New York - The U.S. Department of
Labor sued the trustees, corporations and their principals affiliated with
the Mutual Employees Benefit Trust (MEBT) for diverting more than $2.2
million in assets of the Huntington, New York-based health and welfare
plan to benefit sham labor unions and corporations. |
The suit, filed November 15 in federal district court
in Brooklyn, New York, names as defendants: Leonard Slutsky, his wife
Sharlene Slutsky, and plan trustees Leonard Mandelbaum, Tom Perez, Jack
Neiman and Adena Samowitz. Corporate defendants include third-party
administrator Mutual Association Administrators, Inc. (MAA); Financial
Consultant Guild of America and union locals American Employees Industrial
Guild Local 1 and American Employees Industrial Guild Local 2; the New
York Small Business Network (NYSBN), Netscor, Inc. (Netscor); VCT
Financial Services, Inc. and Marketing Motivation Associates, Inc. MAA,
which was owned by Sharlene and Leonard Slutsky, and provided third-party
plan administration services to the plan. MEBT is a multiple employer
welfare arrangement that has provided group health and other welfare
benefits to as many as 1,912 participants. |
Since 1996 the defendants diverted more than $2.2
million in plan assets to the unions, NYSBN and Netscor in the form of
sham union and association fees. The suit also alleges that Leonard
Shutsky, who was previously convicted on criminal charges, was allowed to
serve as a fiduciary to MEBT. The Employee Retirement Income Security Act
(ERISA) bars persons who are convicted on certain criminal charges from
serving as fiduciaries to any plan governed by the federal pension law. |
As a relief, the suit seeks a court order requiring the
defendants to restore to MEBT all diverted assets and losses with
interest, be removed from their positions as fiduciaries and to
permanently bar them from managing or receiving compensation from any
ERISA plan in the future. The department also asks the court to appoint an
independent fiduciary to manage the plan and to require an accounting of
plan assets. |
“Our goal is to ensure that consumers know that the
department is committed to protect the benefits promised by employers,”
said Francis Clisham, director of PWBA’s New York Regional Office.
“Employers and workers can reach us at 212.337.2228 for help with any
problems relating to private-sector pension and health plans.” |
The case resulted from an investigation by the New York
Regional Office of the Pension and Welfare Benefits Administration into
alleged ERISA violations. |
(Chao v. Slutsky
Civil Action No. 01-7593 (ADS)(TB)) |
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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