Delaware Pension Plan Trustees Sued For Making Over $450,000 In Improper Plan Loans

Archived News Release — Caution: Information may be out of date.

The U. S. Department of Labor has sued the trustees of the John E. Healy & Sons Pension Plan of New Castle, Del. for making over $450,000 in improper loans with plan money.

The pension plan is sponsored by Healy Management Services, Inc, a subsidiary of the Healy Group, Inc. The Healy Group, Inc. and its subsidiaries, which also includes John E. Healy & Sons, Inc., provide construction management services primarily in the Delaware area.

As of October 1997, the plan covered approximately 29 current and former employees of Healy Management Services, Inc. and John E. Healy & Sons. At that time, the plan had just over $1 million in benefit obligations and approximately $297,000 in net assets available to pay benefits.

“Our goal is to assure that consumers know that the department is only a phone call away to help protect the benefits promised by employers," said Mabel L. Capolongo, regional director of the Philadelphia Regional Office of the Labor Department’s Pension and Welfare Benefits Administration. “Employers and workers can reach us at 215-596-1134 for help with any problems relating to private-sector pension and health plans.”

Named as defendants are the Healy Group, Inc. and its subsidiaries, and James V. Healy and Michael J. Healy, both trustees of the plan and corporate officers of the companies.

According to the lawsuit, James V. Healy violated the Employee Retirement Income Security Act (ERISA) by loaning over $450,000 to his financially troubled companies during 1994 and 1996. The loans were unsecured and made without any promissory notes or specified repayment terms.

Michael J. Healy was charged with allowing these loans to be made and failure to reverse them once he became aware the that loans had been made.

The loans have not been fully repaid, thereby allegedly causing losses to the plan as a result of the below-market interest rates applied by the Healys in determining the amounts owed by the companies on the plan loans.

The lawsuit seeks a court order to require that the Healys and their companies reimburse the plan for all losses, to remove the Healys from their positions with the plan and to permanently bar them from serving any plan governed by ERISA. The lawsuit also asks the court to appoint an independent fiduciary to operate the plan.

The lawsuit was filed on Nov. 10 in federal district court in Wilmington, Del. This lawsuit resulted from an investigation conducted by PWBA’s Philadelphia Regional Office into alleged violations of ERISA.

(Herman v. Healy)
Civil Action No. 99-V-774

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

Contact Name: Gloria Della
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