Wachovia National Bank, N.A. and the former
president and chief executive officer of Charter Medical Corp. agreed to
restore $42 million to the corporations employee stock ownership plan
(ESOP) under a settlement agreement with the U.S. Department of Labor. Wachovia
entered into the agreement as the successor to South Carolina National
Bank.
Under the settlement, Wachovia will pay $30
million to the ESOP, which is now known as the Magellan Health Services, Inc.
ESOP. William A. Fickling, Jr., the former president and C.E.O. of Charter
Medical, also will pay another $12 million to the plan. Money restored to the
plan will be allocated to past and present participants and beneficiaries on a
pro-rata basis.
Under a previous Nov. 13, 1996 consent order,
South Carolina National Bank (SCNB), had been permanently removed from its
position with the ESOP and replaced with an independent trustee.
Charter Corporation emerged from reorganization
bankruptcy in July 1992. The ESOP was created in January 1988 and covered
approximately 13,000 participants in 1990.
The Labor Department lawsuit alleged that SCNB
caused the ESOP to overpay for 11,853,569 shares of stock in Charter Medical
Corporation from William A. Fickling, Jr., and related parties, including Neva
L. Fickling, William A. Fickling III, Jane F. Skinner, Julia C. Fickling, Roy
H. Fickling, Claudia F. Fickling, Katherine M. Wright, Virginia M. Rabun,
W&J Capital Co. Ltd., J&R Capital Co. Ltd. and various trusts.
SCNB, the ESOP trustee, allegedly breached its
fiduciary obligations by relying on an unreliable valuation prepared by
Interstate/Johnson Lane Corporation.
The settlement agreement was entered on June 6 in
federal district court in Birmingham, Ala.
This case resulted from an investigation conducted
by the departments Pension and Welfare Benefits Administration into
alleged violations of the Employee Retirement Income Security Act.
(Herman v. South Carolina National Bank) Civil
Action No. 92-H-2858-NE |