Arlington Heights, Ill., Service Provider To Make Restitution Of More Than $14,000 To Pension Plans

Archived News Release — Caution: Information may be out of date.

The U. S. Department of Labor has obtained a consent order and judgment that requires Richard May of Arlington Heights, Ill., to pay more than $14,000 to nine employee benefit plans and permanently bars him from servicing any employee benefit plan governed by federal pension law, except where he is a participant in the ERISA-covered plans of his employer.

The consent order and judgment requires May, an officer of MD Management, Inc., a firm that provides accounting and administrative services to employee benefit plan clients, to restore a total of $14,867.08 to the plans. This amount represents monies retained by May attributable to the plans’ investment in the Stratford Investment Trusts (Stratford Trusts), investment trusts created by May for the purpose of facilitating personal loans to individual borrowers. This amount further represents $7,315.00 in loan origination fees and $7,552.08 in bank account interest attributable to the plans’ investments in the Stratford Trusts that was retained by May and not transferred to the plans. The judgment also prohibits May from creating any future Stratford Trusts or any other investment trusts similar in nature to the Stratford Trusts.

The Department has alleged that, since 1992, May established approximately 15 Stratford Trusts that resulted in the creation of approximately 27 personal loans. The plans served as lenders under these Stratford Trusts in that they funded the proceeds for the loans made. In connection with the Stratford Trusts, May received a one-time loan origination fee from the individual borrowers that he failed to pass back to the plans.

The Department further alleges that May maintained a checking account for the Stratford Trusts in order to facilitate the transfer of loan proceeds from the employee benefit plan lenders to the individual borrowers, as well as for making loan payments to the employee benefit plan lenders. May received all monthly interest earned from the checking account and then failed to forward the interest on to the employee benefit plans.

The case was investigated by the Department’s Chicago Regional Office of the Pension and Welfare Benefits Administration into violations of the Employee Retirement Income Security Act (ERISA).

The consent order and judgment was entered on Oct. 1 in the federal district court in Chicago.

Herman v. May
Civil Action No. 97-C-98993

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

Contact Name: Rita Ford
Phone Number:202.219.8921