Chicago Teamsters' Plan Trustees To Restore $20 Million To Pension Plan

Archived News Release — Caution: Information may be out of date.

Trustees to employee benefit plans of Local 705 of the International Brotherhood of Teamsters in Chicago have agreed to restore $20 million owed to the local union’s pension plan by an affiliated welfare plan under a consent order and judgment obtained by the U. S. Department of Labor.

The restitution returns $16,511,985 to the pension plan which the trustees improperly transferred to the welfare benefit plan, plus interest.

Local 705 sponsors the pension and welfare plans for as many as 7,130 participants employed by companies subject to collective bargaining agreements with the union. As of January 1996, the pension plan had assets of $779,752,231.

Simultaneous with filing of the judgment, the department sued trustees of the Local 705 pension and welfare plans. Named as defendants in the lawsuit are trustees Stephen Bridge, Gerald Zero, Edward Benesch, John Naughton, John McCormick, Michael Faucher and Otis Cross.

According to the lawsuit, the trustees made 13 separate transfers of pension plan assets to the welfare plan over the period from 1991 to 1995. The transfers were made to provide needed financial support to the welfare plan upon the advice of the plans' attorney and actuary that such transfers were authorized under ERISA and the Tax Code. The department contended that those pension plan participants who were not covered by the welfare plan received no benefit from and were in fact harmed by the transfers.

The complaint and judgment were filed on December 10, 1998 in federal district court in Chicago, Illinois. The judgment was entered on December 14, 1998. This case resulted from an investigation conducted by the Chicago Regional Office of the Labor Department’s Pension and Welfare Benefits Administration into alleged violations of the Employee Retirement Income Security Act.

(Herman v. Bridge)
Civil Action No. 98 C 7944

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Archived News Release — Caution: Information may be out of date.

Contact Name: GLORIA DELLA
Phone Number: 202.219.8921