LABOR DEPARTMENT GETS PARTIAL SETTLEMENT WITH FLORIDA RESORT PENSION FUND OFFICIALS

Archived News Release — Caution: Information may be out of date.

The U.S. Department of Labor and owners of G & L Resorts, Inc. in Ormond Beach, Fla.. agreed to an interim settlement removing them from their positions with the plan as partial resolution of a lawsuit alleging they misused pension plan assets to pay company expenses.

Defendants Gilbert and Linda Ward were removed from their plan positions and permanently barred from serving any other employee benefit plan governed by federal pension law in an order signed by U.S. District Judge Sharp today. The court also appointed Paul J. McTague of Naples, Fla., as an independent fiduciary to manage the plan, to conduct an orderly termination of the plan and to distribute its assets.

The defined benefit plan, established in 1988, had approximately 25 participants and $354,039 in assets as of Oct. 30, 1997. The company is a private corporation engaged in providing a camper resort for tourists and a permanent residence for many retirees.

Under the settlement, McTague is authorized to hire an enrolled actuary to prepare benefit calculations. These calculations will be used to determine the final terms of the settlement, including any additional restitution to the plan.

The department’s complaint, filed simultaneously with the interim settlement, alleges that in 1991, the Wards decided to terminate the plan and communicated their decision to participants. Despite this intention and announcement, the plan was never terminated nor were its assets distributed. The accrual of benefits to the present will significantly increase the participants’ account balances.

The lawsuit also alleges the Wards withdrew $111,223 from the plan’s trust account in 1993 to pay a balloon mortgage on the resort property. Once the impropriety of the transaction was pointed out by the Labor Department, the Wards paid the loan principal, plus 2.27 percent interest, but the department alleged that amount of interest did not fully compensate the plan for losses sustained during the time the misappropriated funds were used by the Wards and their company.

The settlement is a result of an investigation carried out by the department’s Atlanta Regional Office of the Pension and Welfare Benefits Administration, which administers the fiduciary standards of the Employee Retirement Income Security Act (ERISA). It was entered in the federal district court in Orlando.

(Herman v. G & L Resorts, Inc. et al)
Civil Action # 99-521-CIV-ORL-18

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

Contact Name: Sharon Morrissey
Phone Number: (202) 219-8921