The U.S. Department of Labor filed a lawsuit
on Aug. 14 against the administrator of four multiemployer plans in Jersey
City, N.J., for using the plans' assets for his own benefit and other
violations of federal pension law. The lawsuit also alleges the plans' seven
trustees failed to properly monitor the actions of the administrator.
Named in the lawsuit are Carmelo J. Sita,
administrator of the four plans that provided retirement, health and vacation
benefits to employees of the Hudson County District Council; and trustees
Stephen Crevani, Salvatore DiBlassi, Frank DiTomasso, Ralph La Rocca, Salvatore
Reo, Cosmo Sancio and Nick Sita; and Local Union 325 of the Laborers
International Union of North America.
The District Council represents employees of
employers in the construction industry and is affiliated with Local 325 of
the Laborers International Union, AFL-CIO. Sita was retained as
administrator to the Councils pension, annuity, welfare and vacation
funds in 1978.
The lawsuit alleged from 1994 until his
resignation as the funds administrator in 1999, Sita engaged in various
actions that violated the Employee Retirement Income Security Act (ERISA) that
included:
- using plan funds to partially pay salaries of business
agents
to the Council and Local 325, while failing to determine the
value of the services provided to the plan;
- using the pension and annuity funds to pay a disproportionate
amount of
common expenses, such as office rent and supplies;
- paying many of the Councils expenses from the pension
fund;
- overstating the hours he worked on the pension and annuity
funds to
enhance his entitlements;
- failing to allocate fund expenses to the individual accounts
of participants,
resulting in some retirees receiving inflated payments;
and
- failing to declare two loans made to him by the annuity
plan in default, and to reimburse the plan.
The lawsuit also alleged that during the period
1994-1999 the plan trustees failed to undertake reasonable efforts to oversee
the expenditures of the funds money being administered by Sita; failed to
ensure that Sita complied with the guidelines for expenditures adopted by all
the funds; and failed to oversee the administration of the annuity funds
loan program.
The lawsuit seeks to require that Sita and the
trustees restore to the plan all losses, plus interest; correct any prohibited
transactions with the plans; have their account balances offset for the amounts
owed to the respective funds; and be permanently barred from serving as
fiduciaries and service providers to any ERISA-covered plan.
Our goal is to assure that consumers know
that the department is only a phone call away to help protect the benefits
promised by employers, said Jonathan Kay, acting regional director of the
New York Regional Office of the Labor Departments Pension and Welfare
Benefits Administration. Employers and workers can reach us at (212)
637-0620 for help with any problems relating to private-sector pension and
health plans.
The action resulted from an investigation by the
New York Regional Office of the Pension and Welfare Benefits Administration
into violations of ERISA. The lawsuit was filed in the federal district court
in Newark, N.J.
Herman v. Sita et al. |