Minnesota Trustees Ordered To Correct ERISA Plan Violations Under Consent Order And Judgment

Archived News Release — Caution: Information may be out of date.

Thomas Buchanan, William Buchanan, and John Buchanan, trustees of the Northern-Minnesota Wisconsin Area Health Care Retirement Plans for union and non-union employees of Donjer, Inc. and Buchanan Nursing Home, Inc. (BNH) in Duluth, Minn., were ordered to terminate the plans and make distribution of plan assets to plan participants under a consent order and judgment reached with the U.S. Department of Labor.

The consent order and judgment required the defendant trustees to terminate the plans and file required financial reports from 1998 through the year of the plans’ termination. Further, Thomas Buchanan was required to waive any interest he may have had in $137,168.89 recovered as part of an out-of-court settlement with Norwest Bank Minnesota North, N.A. (Norwest). An additional $37,602 was also contributed to the plans from the liquidation of Donjer, Inc. through its bankruptcy proceeding. Prior to filing of the suit, trustee John Buchanan paid $50,449.50 to the plans for employees of the BNH.

As part of the out-of-court settlement with directed trustee Norwest, it has agreed to locate and make distribution to the 109 individual participants affected based on their pro rata share of the plans’ assets available for distribution.

The court order resulted from a lawsuit filed in 1997 alleging that the trustees violated the Employee Retirement Income Security Act (ERISA) by, among other things, failing to enforce the collection of a judgment entered against the plans’ sponsors on behalf of the plans. The breaches constituted an illegal extension of credit to the Donjer and BNH corporations, which administered and sponsored the plans. The three defendants were also directors of the corporations.

The department’s action resulted from an investigation by the Kansas City Regional Office of the Pension and Welfare Benefits Administration into violations of ERISA. The consent order and judgment were entered on Oct. 25, in the U.S. District Court in Duluth, Minn.

Herman v. Buchanan et al
Civil Action No. 97-1821 MJD/RLE

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Archived News Release — Caution: Information may be out of date.

Contact Name: Rita Ford
Phone Number: 202.219.8921