Labor Department Sues Trustees Of Bankrupt Michigan Company For Interest On Plan Assets

Archived News Release — Caution: Information may be out of date.

Cincinnati, Ohio - The U.S. Department of Labor sued trustees of the retirement plan of bankrupt MCA Financial Corporation in Southfield, Michigan on March 6, 2002 to restore more than $15,000 in lost opportunity cost owed to the plan on delinquent employee contributions and loan payments.

“Our goal is to protect the hard-earned benefits promised by employers," said Joseph Menez, director of the Cincinnati Regional Office of the Labor Department’s Pension and Welfare Benefits Administration (PWBA), which investigated the case.

Named in the suit are trustees Patrick D. Quinlan, Lee P. Wells and Keith D. Pietila. The defendants also were officers of MCA Financial, which sponsored the Mortgage Corporation of America Employees’ Retirement Plan for 428 participants employed by the company and its 11 subsidiaries. As of March 4, 2002, the plan had $4,517,139 in assets.

According to the suit, the department sued the defendants for lost opportunity cost arising from the delinquent employee contributions and loan repayments that were held in the general assets of the corporation and not remitted to the retirement plan. On April 26, 2001, a federal bankruptcy court ordered the defendants to immediately pay $169,928.18 in principal owed to the plan for employee and employer contributions as well as loan payments.

As relief, the suit seeks to require that the trustees make restitution to the plan by offsetting their plan accounts and distribute the assets to the accounts of the remaining plan participants. The suit also asks the court to appoint an independent fiduciary and permanently bar the defendants from serving in positions of trust to any employee benefit plan governed by the Employee Retirement Income Security Act.

This case was filed in federal district court in Detroit, Michigan.  Employers and workers can contact the regional office through the agency’s new Toll-Free Employee & Employer Hotline: 1.866.275.7922, for help with any problems relating to private-sector pension and health plans.

(Chao v. Quinlan
Civil Action No.02-70844)

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Archived News Release — Caution: Information may be out of date.