Labor Department Recovers Over $2 Million For Union Pension Plans

Archived News Release — Caution: Information may be out of date.

The U. S. Department of Labor obtained a settlement agreement with trustees of the Connecticut Plumbers and Pipefitters pension fund and a former securities broker requiring them to pay more than $2.4 million in restitution and civil penalties. The settlement also requires the trustees to establish procedures on and monitor investments by the plan.

Under the settlement, Steven G. Hassenmiller agreed to pay $110,000 to the pension plan of the Plumbers as well as two retirement funds of Local 35 of the International Brotherhood of Electrical Workers/National Electrical Contractors Association (NECA-IBEW) and civil penalties to the federal government. He also is barred for three years from serving in a position of trust to any plan governed by the Employee Retirement Income Security Act (ERISA). Hassenmiller was a former securities broker to the retirement plans.

The settlement fully resolves charges by the department involving imprudent investment of assets of the Plumbers fund. The settlement does not, however, fully resolve allegations against trustees of the Local 35 funds. Litigation continues in the lawsuit involving trustees of the Local 35 funds.

In the Plumbers’ case, the department alleged that the trustees and Hassenmiller caused the Plumbers’ plan to lose over $3 million on investments in 79 collateralized mortgage obligations (CMOs) — a class of derivatives — purchased for the plan through various employers of Hassenmiller. Hassenmiller was an employee of Paine Webber, Westcap Government Securities and Arbour Financial Corp.

The department’s lawsuit alleged that the trustees failed to analyze the investment risks associated with making the investments, improperly gave the broker discretion over the decision to buy and sell the securities, violated plan rules related to investment managers, failed to establish investment guidelines, and failed to monitor the broker and the fund’s derivative investments.

In the Local 35 lawsuit, the department charged the trustees and Hassenmiller with similar allegations with regard to 31 investments made by the funds in CMOs. Named in that lawsuit were Hassenmiller and trustees Frank J. Bramanti, Nicholas R. Bonadies, Glendon L. Bonday, Carl DiFazio, James N. Gunning, Richard G. Kemp, Edward Kowalski, Kenneth B. Leech, Michael R. Moconyi, Edward T. McPhee Jr., John P. Murphy Jr., Robert W. Murray Jr., and Robert A. O’Neil.

All three retirement funds are headquartered in Wallingford, Conn. The Plumbers fund covered 2,475 participants and had $106 million in assets by March 1994. The Local 35 funds covered 768 participants and had assets of approximately $46 million as of March 1994.

The settlement agreement along with separate consent judgments and a court order were entered in federal district court in New Haven on May 27. Both cases resulted from civil investigations conducted by the Boston Regional Office of the department’s Pension and Welfare Benefits Administration into alleged violations of ERISA.

(Herman v. Hassenmiller)
Civil Action No. 3:96 CV 1514 CDJS

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

Contact Name:GLORIA DELLA
Phone Number: 202.219.8921