EBSA Press Release: Trustees Of N.Y. Carpenters Plans Sued For Over $37 Million [07/05/1996]

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The U. S. Department of Labor has sued the trustees of the New York District Council of Benefit Funds for misusing more than $37 million in assets of the pension, annuity, vacation and welfare funds of the New York District Council of Carpenters.

The New York City District Council of Carpenters sponsors pension, annuity, vacation, welfare and apprenticeship plans under collective bargaining agreements with contributing employers. The plans covers more than 23,000 members. Collectively, the funds had in excess of one billion dollars in assets at the end of September 1993.

According to the lawsuit, the trustees to the funds violated the Employee Retirement Income Security Act (ERISA) by:

• transferring more than $37.6 million from the pension, annuity and vacation funds to the welfare fund;
• failing to collect money transferred to the welfare fund;
• paying the lease and insurance on luxury vehicles, equipped with cellular telephones, used by numerous employees of the funds without determining whether such use was needed and the costs reasonable;
• failing to enter into leases and collect rent owed to the pension and apprenticeship funds by the District Council, union locals and the other funds;
• compensating employees Alan Burns and Dominick Lavacca without monitoring services they provided to the funds and failing to obtain reimbursement for services performed for the Council at plan expense.

Named in the lawsuit are former union trustees of the funds, some of whom were removed by the Carpenters International Union of the AFL-CIO last week, current and former employer trustees of the funds, the District Council, Resilient Floorcoverers Local 2287 and United Brotherhood of Carpenters and Joiners of America Local 1456. The individual trustees named as defendants were Frederick W. Devine, John Abbatemarco, Charles Terjesen, Thomas Nastasi, Jr., Robert Cavanaugh, Julius Kleinstein, Paul J. O'Brien, Edmund Greco, Alvin M. Jaff, Richard Harding, Jr., John A. Brunetti, Francis McHale, Pascal McGuinness, Irving Weidman, Theodore E. King, Joseph J. Fater and Michael Crimi.

The lawsuit seeks a court order to require that the trustees restore all losses resulting from their improper actions, require the funds and the unions to repay any funds that were improperly received by them and to correct all prohibited transactions.

The case is the result of an investigation by the New York Regional Office of Pension and Welfare Benefits Administration. The complaint was filed on July 2 in federal district court in New York City.