Latrobe, Pa. Trustees Sued Over Misuse Of Pension Assets

Archived News Release — Caution: Information may be out of date.

The U.S. Department of Labor has sued a Latrobe, Pa. retirement plan’s official, John P. Kokonaski, Jr., for using $280,000 of the plan’s assets for his own living expenses and for the company’s operating expenses. Another plan trustee and a part owner of the firm, Wayne A. Ludwig, was included in the lawsuit because he co-signed some of the unlawful checks written on the plan’s account and failed to make adequate provisions for the plan to be managed prudently when he retired from the company in 1992 and resigned from his duties as a plan trustee.

Foothills Litho Co., also partially owned by Kokonaski, filed for bankruptcy in 1994 and was liquidated in 1997. The company sponsored a money purchase pension plan covering 53 participants and had approximately $514,000 in assets as of 1993. At the department’s request, Kokonaski resigned his position with the plan in 1998, and an independent fiduciary, Laurel Trust Company, was appointed to administer the plan.

According to the department’s lawsuit, between 1990 and 1997, Kokonaski made 182 withdrawals from the plan for a total of $198,436. Kokonaski allegedly signed all of these checks in his capacity as trustee of the plan, with no loan notes, payment schedules and security given for these disbursements. The lawsuit notes that no money was ever returned to the plan.

In its lawsuit, the department is seeking to have the defendants restore the monies lost to the plan through their fiduciary violations of the Employee Retirement Income Security Act (ERISA) and for Kokonaski’s individual plan account to be set off if the plan losses plus interest are not otherwise repaid by him and by Ludwig. The lawsuit also seeks to have the defendants permanently barred from serving as fiduciaries of any employee plan covered by federal pension law.

The investigation in this lawsuit was conducted by the department’s Philadelphia Regional Office of the Pension and Welfare Benefits Administration. The complaint was filed in the federal district court in Pittsburgh on Aug. 17.

Herman v. Foothills Litho Company, Inc.
Civil Action # 98CV-1376

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Archived News Release — Caution: Information may be out of date.

Contact Name: Sharon Morrissey
Phone Number: 202.219.8921