Philadelphia Iron Workers' Annuity Fund and Trustees to Repay Plan $456,655 to Resolve Labor Department Lawsuit

Archived News Release — Caution: Information may be out of date.

Today the U.S. Department of Labor settled its lawsuit with trustees of the annuity fund of Iron Workers Local 401 who agreed to repay a total of $456,665 to the fund. They allegedly paid a salary to the plan's administrator, who already was a full-time employee of the union, and imprudently administered a participant loan program.

Defendants include the plan administrator Joseph Dougherty, and fund trustees Susan Dachowski, James Donaghy, William Gardner, James Graf, Robert Grossi, Francis Henry, Robert MacDonald, Peter McDonough, Ned Patton, George Shepardson and William Tatum and the annuity fund. In today's consent order, Dougherty was personally ordered to pay $40,000 of the settlement amount from his own account in the plan and also agreed not to enter any domestic relations order which would impair or preclude his payment due to the fund from him.

In addition, the defendants agreed to pay a penalty of $83,333 assessed by the Labor Secretary for its fiduciary breaches of the Employee Retirement Income Security Act. Dougherty also agreed to pay a penalty of $8,000.

Local 401 of the International Association of Bridge, Structural and Ornamental Iron Workers represents employees working for various employers who are members of the Steel Erectors Association of Philadelphia. Since 1982, the union and its employers have provided supplemental retirement benefits to covered employees. As of 1998, there were 1,418 participants, with $66.7 million in assets, of which $5.1 million had been loaned to participants.

The fund allegedly allowed participants with three years' standing to borrow from the fund, with maximum loans the lesser of $50,000 or one-half the participant's account balance. Ultimately, the lawsuit charges that trustees failed:

• To set a proper amortization schedule for the loan repayments
• To enforce repayment terms and to collect interest
• To assess late fees or additional interest.

According to the lawsuit, trustees were not actively involved in running the fund, leaving that responsibility to Dougherty, who is secretary-treasurer and a full-time employee of the union, as well as plan administrator of the fund. In October, 1998, trustees voted to compensate Dougherty for his services to the plan up to10 hours a week at the general foreman's hourly rate and up to 10 hours a week in contributions to the fund -- acts which resulted in dual compensation to Dougherty.

The consent judgment, entered in the federal district court in Philadelphia, is a result of an investigation by the Philadelphia Regional Office of the department's Pension and Welfare Benefits Administration, which oversees federal pension law. The lawsuit was filed in the same court on January 31, 2001.

(Secretary of Labor v. Joseph Dougherty, et al
Civil Action No. 01-CV-502)

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