Avon, Connecticut, Employer Repays Loan Interest To Employee Pension Plan Following U.S. Labor Department Investigation; Agrees To Court Order Prohibiting Future Violations Of Federal Pension Law

Archived News Release — Caution: Information may be out of date.

Fred Brunoli and Sons, Inc., of Avon, Connecticut, and John F. Brunoli as president of the company and trustee of the company’s employee pension plan, have agreed to a federal court order which prohibits them from future violations of the federal law which protects employee pension plans.

According to James Benages, New England Regional Director of the U.S. Labor Department’s Pension and Welfare Benefits Administration (PWBA), an investigation by his office into an alleged illegal loan involving the Fred Brunoli and Sons, Inc., Pension Plan resulted in the legal settlement announced today.

A court complaint filed simultaneously with the consent judgment, which was signed by U.S. District Judge Christopher F. Droney on February 23, 2000, had alleged that in March 1995, John F. Brunoli loaned approximately $57,000 in company assets to a newly hired company official and his wife. The loan remained in default until November 1995 when Mr. Brunoli and his company caused the company’s pension plan to transfer approximately $57,589.04 in plan assets to the debtors for the purpose of repaying the loan to Brunoli and Sons, Inc.

Benages noted that the company, as sponsor of the pension plan, was a party in interest, and that the alleged transfer of pension plan assets for the benefit of the company was a prohibited transaction under the Employee Retirement Income Security Act (ERISA).

Further, Benages indicated that the debtors made no payments on the second loan between November 1995 and December 1997. Finally, on December 11, 1997, the principal balance of the loan was repaid to the pension plan, but with no interest. An investigation of this matter by PWBA finally resulted in John F. Brunoli repaying to the pension plan $11,454.70 in interest and the subsequent settlement of the Labor Department’s impending lawsuit.

According to Benages, the consent judgment permanently prohibits John F. Brunoli and Fred Brunoli and Sons, Inc., from future violations of ERISA.

Benages stressed that the Employee Retirement Income Security Act specifically requires plan officials to administer such plans solely in the interest of the participants and beneficiaries, for the exclusive purpose of providing benefits to those participants and their beneficiaries.

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 legal action against the defendants resulted from an investigation by the Pension and Welfare Benefits Administration. The agency’s New England regional 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 300-CV-318-CFD.

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