Rhode Island Labor Union And Employee Benefit Plan's Board Of Trustees Agree To Restore Nearly $250,000 To The Plan As The Result Of U.S. Labor Department Lawsuit

Archived News Release — Caution: Information may be out of date.

As the result of a lawsuit filed by the U.S. Department of Labor, the International Brotherhood of Electrical Workers Local Union No. 99, based in Cranston, Rhode Island, and members of the Board of Trustees of the union’s Joint Apprenticeship and Training Committee Trust have agreed to restore a total of $246,700.66 to the trust (which is considered to be an employee benefit plan under federal law).

According to James Benages, New England regional director of the Labor Department’s Pension and Welfare Benefits Administration, an investigation by his agency into possible violations of the Employee Retirement Income Security Act (ERISA) led to the filing of the Department’s lawsuit. ERISA protects and governs the administration of employee benefit plans such as pension plans, 401(k) plans, employer provided health insurance plans, and the like. In this case, the trust was created in cooperation with employers to train apprentices for the electrical trade and to provide training programs for journeyman electricians to meet industry demands.

Named as defendants in the suit were the union itself and members of the Board of Trustees for the Joint Apprenticeship and Training Committee Trust, including: Carmine Gelsomino, William Lepore, Jr., Walter L. Perry, Jr., John Vinnitti, Patrick Brady, Arthur Watson, Raymond Lambert, Mary Germershausen, and G. Thomas Chabot. Richard Irace, director of the trust, was named in the suit as well. The directors and trustees, as well as the union, are parties in interest to the trust under ERISA.

The suit alleged that the trustees and directors attended out of state conferences and authorized payment with plan assets of travel stipends to themselves without any consideration of the actual expenses and without any accounting or receipts for same. The suit also alleged that the trustees caused or permitted the plan to rent office space in the Local Union No. 99 union hall without a valid lease, and to pay rent in excess of reasonable compensation for the space.

As a result of this conduct, the suit alleged that the trustees failed to discharge their duties with respect to the plan solely in the interest of the participants and beneficiaries of the plan; and that they engaged in transactions which constituted a transfer of plan assets to parties in interest to the plan, namely themselves. This type of conduct is expressly prohibited under ERISA.

The Department’s lawsuit has been resolved, for the most part, with the signing of a partial consent judgment and order by U.S. District Court Chief Justice Ronald R. Lagueux on August 20, 1999. The Union and all of the individual defendants (except for the estate of Carmine Gelsomino) have agreed to entry of the judgment, which permanently enjoins defendants William Lepore, Jr., Walter L. Perry, Jr., John Vinnitti, Patrick Brady, Arthur Watson, Raymond Lambert, and Mary Germershausen from future violations of ERISA.

Defendants Richard Irace and the International Brotherhood of Electrical Workers Local Union No. 99 are also enjoined from engaging or participating in any violation of the law. Within thirty days of the entry of the judgment, the defendants must pay the following amounts to the Local 99 Joint Apprenticeship and Training Committee Trust:

Said Benages, “Those institutions and individuals holding positions of trust with respect to employee benefit plans of any kind must be aware of their responsibilities under the law. Plan funds must be used only for the benefit of participants and beneficiaries, not for the benefit of those administering the plan. Misuse of plan funds for any other purpose will not be tolerated.”

The Pension and Welfare Benefits Administration office is located in the John F. Kennedy Federal Building in Boston. The phone number is 617-565-9600. The civil action file number for this case is 99-361 L.

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

Contact Name: John M. Chavez
Phone Number: 617. 565.2075