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Release Date: 03/14/2000 Release Number:
2000-037 Contact Name: John M. Chavez Phone Number:
617.565.2075 |
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The U.S. Department of Labor has filed suit
against Wiretex Manufacturing Company, Inc., of Fairfield, Connecticut, and the
companys top two officers alleging misuse of the assets of the
companys employee pension plan. |
According to James M. Benages, New England
Regional Director of the U.S. Labor Departments Pension & Welfare
Benefits Administration (PWBA), the Departments suit alleges that the
company, as well as company president Robert Garofalo and company vice
president Emil Garofalo, misused a total of $642,850 in assets belonging to the
Wiretex Manufacturing Company, Inc. Pension Trust Plan. The pension plan was
established in 1964 to provide retirement and death benefits for employees of
the company. |
Such an employee benefit plan, Benages noted, is
subject to the requirements of the Employee Retirement Income Security Act
(ERISA), which makes it the responsibility of those administering the plan to
make sure that plan assets are invested wisely and used solely for the benefit
of the plans participants and beneficiaries. |
According to Benages, Wiretex operates a metal
fabrication business. The companys pension plan has ten active
participants, including the two individual defendants, who are both trustees of
the plan. Because of the actions of the defendants, as of August 30, 1999, the
only assets remaining in the plan amounted to approximately $3,645. |
Our suit alleges, said Benages,
that, during the period August 1, 1991 through the present, the company
has acted as the sponsor and administrator of the pension plan, while both
Robert and Emil Garofalo have served as trustees to the plan. This means that
all three defendants are fiduciaries and parties in interest with respect to
the plan. We charge in our suit that Robert and Emil Garofalo caused the
pension plan to loan to Wiretex at least $484,800 in plan assets, which loan
has never been repaid. We further allege that both defendants caused the plan
to distribute at least $158,050 in plan assets to Robert Garofalo, in violation
of the plans own rules. |
Benages stressed that both alleged actions are
violations of the provisions of ERISA which prohibit pension plan fiduciaries
from using plan assets for their own benefit. In addition, he noted that the
defendants are charged with failing to provide plan participants with summary
Plan descriptions and annual reports, as well as other information required by
law. |
Such breaches of trust cannot go
unchallenged, said Benages, who noted that the Departments suit was
filed with the U.S. District Court for the District of Connecticut on March 13,
2000. The suit asks the court to permanently enjoin Robert and Emil Garofalo
from ever again serving as fiduciaries to any ERISA-covered plan; permanently
enjoin Wiretex from acting as a plan administrator; require the defendants to
restore any and all losses they caused to the plan, with interest; and require
the defendants to undo the prohibited transactions in which they engaged, and
return all profits, with interest, to the plan. |
Said Benages, Those institutions and
individuals holding positions of trust with respect to employee benefit plans
of any kind must be aware of their responsibilities under the law. Plan funds
must be used only for the benefit of participants and beneficiaries, not for
the benefit of those administering the plan. Misuse of plan funds for any other
purpose will not be tolerated. |
The legal action against the defendants resulted
from an investigation by the Pension and Welfare Benefits Administration. The
agencys New England regional office is located in the John F. Kennedy
Federal Building in Boston. The phone number is 617-565-9600. The civil action
file number for this case is 300cv463(JBA). |
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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