Norwood, Massachusetts, Employers Enjoined from Future Violations of Federal Pension Protection Law - Barred for Ten Years from Dealing with Pension or Benefit Plans

Archived News Release — Caution: Information may be out of date.

Boston, Massachusetts - Two owners of a Norwood-based real estate development and construction company have been prohibited for the next ten years from holding positions of responsibility with any pension or employee benefit plan by a May 15, 2001, consent judgment issued by the U.S. District Court for Massachusetts to settle a lawsuit filed by the U.S. Department of Labor.  The judgment also prohibits the defendants from future violations of the federal law that protects private employee pension and welfare benefit plans.

In its suit, filed May 11, 2001, the Labor Department charged S. Robert Wolf and Frederick Greatorex, both of whom were officers, directors and principals of Wolf Construction Corporation of 725 Canton Street, Norwood, with violating the Employee Retirement Income Security Act (ERISA). During the period covered by the lawsuit, November 11, 1993, to the present, the company employed over 30 workers. Most were participants in the company-sponsored 401(k) plan, known as the Wolf Construction Corporation Profit Sharing Plan and Trust.

The suit charged that the defendants, who were trustees and fiduciaries of the 401(k) plan, caused the plan to make unsecured loans totaling $1,422,000 to several companies in which both defendants had controlling and/or ownership interests. In particular, the suit noted that an unsecured loan of $300,000 by the plan to 1401 The Reservoir, LLC, a Massachusetts limited liability corporation of which Frederick Greatorex was fifty percent owner, constituted an illegal extension of credit between the plan and a party in interest, as well as the transfer of plan assets to a party in interest.

ERISA requires that employee benefit plan assets be used and invested solely for the benefit of the plan’s participants, according to James Benages, regional director in Boston for the Labor Department’s Pension and Welfare Benefits Administration, which administers ERISA. The law specifically prohibits the use of plan assets for the benefit of any party in interest (related party) with respect to the plan.

Even though the unsecured loans were repaid with interest between January 13, 1995, and December 28, 1999, the department’s suit alleged that the actions by the defendants consisted of the use of plan assets for the benefit of parties in interest with respect to the plan, including dealing with the assets of the plan in their own interest and for their own account. The suit also charged that the defendants acted on behalf of parties whose interests were adverse to the interests of the plan and the interests of the participants and beneficiaries of the plan.

The consent judgment, signed by U.S. District Judge Rya W. Zobel, resolved the Labor Department’s suit, with the defendants’ agreement to entry of the judgment while neither admitting nor denying the department’s allegations. The order permanently enjoins them from future violations of ERISA, and prohibits them from serving as fiduciaries to any ERISA-covered plan for 10 years.

The Labor Department’s legal action followed an investigation by the Boston Regional Office of the Pension and Welfare Benefits Administration. That office is located in Room 575 of the John F. Kennedy Federal Building in Boston. The telephone number is 617.565.9600.

(Chao v. S. Robert Wolf and Frederick Greatorex
Civil Action No. 01-CV-10807-RWZ)

U.S. Department of Labor news releases are accessible on the Internet. The information in this news release will be made available in alternate format upon request (large print, Braille, audio tape or disc) from the Central Office for Assistive Services and Technology. Please specify which news release when placing your request. Call 202.693.7773 or TTY 202.693.7775.

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