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Release Date: 04/19/2004
Release Number: USDL 04-663-NEW
Contact Name: Gloria Della
Phone Number: 202.693.8666
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New York, New York - The U.S. Department of
Labor has obtained an order from a federal court in Syracuse, New York,
requiring the former principals of Bennett Funding Group Inc. to restore
$2.66 million plus interest to the company’s pension, profit sharing and
401(k) plans. |
“The
Labor Department’s legal actions in the Bennett Funding Group case will
restore $2.66 million plus interest in lost assets to these workers and
make clear that those who manage retirement assets cannot ignore their
fiduciary responsibilities,” said Secretary of Labor Elaine L. Chao. “This
Administration has a strong track record of protection of the benefits
promised to America’s workers. Last year we achieved record monetary
results totaling $1.4 billion for retirement, 401(k), health and other
programs.” |
The
department sued Edmund Bennett and his son, Patrick, for violating the
Employee Retirement Income Security Act (ERISA) by diverting plan money to
Bennett Funding Group and two other companies in which Patrick Bennett had
ownership interests. The Bennetts also allegedly made unsecured loans
totaling $250,000 to Hemlock Associates, a firm unrelated to them. The
Bennetts and the Bennett Funding Group were charged with failing to
collect the money owed to the plans. |
As
plan fiduciaries under ERISA, the Bennetts are personally liable for
losses caused by their actions. In its decision, the court found the
Bennetts liable for plan money diverted to Bennett Funding Group. The
court ruled Edmund Bennett’s “breach of his fiduciary duty enabled
Patrick Bennett to commit his repeated breaches.” |
In an earlier court judgment, Bennett Funding Group and
its subsidiary, the Bennett Management & Development Corp., were
ordered to disgorge $2.4 million received from unlawful transfers and pay
the plan an additional $1.2 million in lost opportunity costs. The
judgment against the corporate defendants was negotiated with Richard C.
Breeden, the Chapter 11 bankruptcy trustee appointed by the U.S.
Bankruptcy Court for the Northern District of New York. Any distribution
of this restitution to participants will be subject to final proceedings
of the bankruptcy court. |
Edmund
and Patrick Bennett were corporate officers and trustees of the plans at
various times. Syracuse-based Bennett Funding Group was primarily engaged
in the leasing of office equipment. The company sponsored the three plans
for as many as 230 participants. The plans collectively had approximately
$3.6 million in assets, in addition to the money diverted by the Bennetts,
according to the latest information available to the department. |
Employers
and workers can contact the Boston regional office of the Employee
Benefits Security Administration at 866.275.7922 for help with any
problems relating to private-sector pension and health plans. |
(Chao
v. Bennett Funding Group)
Civil Action No. 97-CV-0148 (NAM) |
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 202.693.7755. |