Industrial Workers' Fund Official Issued By U.S. Department Of Labor

Archived News Release — Caution: Information may be out of date.

Trustees and administrators of the now defunct Brotherhood of Industrial Workers’ health and welfare fund have been sued by the U.S. Department of Labor for diverting or permitting the diverting of close to $700,000 needed to pay medical and dental claims and to pay the costs of administering the fund.

The fund was established in 1972 by the International Brotherhood of Industrial Workers, Local 119 and Local 835 of the Sanitation Workers, and employers to provide medical and dental benefits to union members.

The fund was located in Central Islip, NY, from 1972 to 1994 and covered participants from several states including New York, New Jersey, Pennsylvania, California, Arizona and Florida. In 1994 the fund relocated to Palm Beach Gardens, Fla. The fund ceased operations in May 1996 because it lacked sufficient assets to pay benefit claims, leaving the outstanding obligations of approximately $700,000. Currently, the fund has several private lawsuits against it for outstanding medical claims.

The department’s civil lawsuit alleges that trustees Helen Williams and Donald Gancio and past and present administrators Joseph Merino and his wife Sandra Briand violated their fiduciary duties under the Employee Retirement Income Security Act (ERISA) when they granted extensions of credit to Clarke Lasky, president of Employee Health Plan Administrators (EHPA). Lasky allegedly failed to remit health benefit premiums received from employers to the fund

Clarke Lasky, also listed as a defendant in this case, allegedly diverted employer premiums intended for the fund on at least two separate occasions. On Jan. 23 Lasky entered a plea of guilty under a criminal plea agreement after being indicted for embezzlement of approximately $750,000 of plan assets from the fund for his own use. He is scheduled to be sentenced April 10.

The civil lawsuit also alleges that the defendants acted imprudently when they continued to permit Lasky to collect employer contributions and gave him extensions of credit while knowing that he had previously been convicted in 1984 of theft of plan assets from another fund. Lasky pled guilty in 1984 to embezzlement of employee benefit plan assets, violating the Racketeer Influence and Corrupt Organizations Act (RICO), and attempted federal income tax evasion. Then, he was sentenced to six years in prison and ordered to make restitution to the victimized plan as part of his plea agreement.

The department’s lawsuit seeks to have defendants account for all monies belonging to the fund; to make restitution for any losses, including lost interest; and to remove the current trustees and administrator and permanently bar them and Lasky from serving as fiduciaries to any ERISA- covered employee benefit plan. The lawsuit also asks the court to appoint an independent trustee to hold and distribute fund assets to plan participants

This lawsuit is the result of an investigation conducted by the New York Regional Office of the department’s Pension and Welfare Benefits Administration into violations of federal pension law. It was filed in federal district court in the Eastern District of New York on March 13.

(Herman v. Merino, et al.)
Civil #XXXXX

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Archived News Release — Caution: Information may be out of date.

Contact Name: Sharon Morrissey
Phone Number: 202.219.8921