Tacoma Pension Plan Officials Agree To Restore Losses In Court Settlement With U.S. Labor Dept.

Archived News Release — Caution: Information may be out of date.

Seattle - The U.S. Department of Labor announced today that Consent Judgments were signed this week in the United States District Court for the Western District of Washington, Tacoma, which formalize negotiated settlements affecting management of the J.D. English Steel Company Profit Sharing and 401(k) Plan and ordering restitution to the plan for alleged violations of the Employee Retirement Income Security Act of 1974 (ERISA).

According to John Scanlon, district supervisor for the Pension and Welfare Benefits Administration here, a civil lawsuit filed May 27, 1999, sought equitable relief for the plan arising from alleged breaches of fiduciary duty on the part of current plan trustee James H. O'Brien; former plan trustees William E. Saylor and Raymond A. Johnson; and Agnes Rosenberger, an officer of J.D. English Steel Company, the now-closed Tacoma business which sponsored the Plan. All the defendants are Pierce County residents.

The Consent Judgments order the defendants to restore losses to the plan, including lost opportunity costs, remove current trustee O’Brien, and appoint an independent fiduciary. Further, the three trustees are permanently enjoined from serving as a fiduciary or service provider to any employee benefit plan subject to ERISA, and all four defendants are permanently enjoined from future violations of ERISA.

The Labor Department’s suit alleged that the plan trustees caused the plan to make nonperforming real estate loans and limited partnership investments which were imprudent and not in accordance with the plan's governing instruments, Scanlon said. The alleged imprudent investments involved projects formed by J.A. Groce Private Placement, Inc., including one which is to be developed by Badger Mountain Partners. Both are Tacoma concerns. Approximately $533,430 related to these allegedly imprudent investments will be restored to the plan under the Consent Judgments.

In addition, O'Brien and Rosenberger are alleged to have engaged in transactions specifically prohibited by ERISA when O'Brien caused the plan to transfer plan assets to the plan sponsor, to himself, and to Rosenberger, all of whom were parties in interest to the plan. These prohibited transactions have also been corrected, with another $214,551 restored to the plan.

Note to editors: Civil Action File # C99-5295 FDB, Herman v. O’Brien et al.

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

Contact Name: Mike Shimizu
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