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News Release
Labor Department Sues Union Labor Life Insurance Co. And Investment Manager Over $10 Million Pension Investment
Archived News Release — Caution: Information may be out of date.
Washington, DC - The U.S. Department of Labor sued Washington, D.C.-based Trust Fund Advisors and Union Labor Life Insurance Co. (ULLICO) on March 22, 2002 for imprudently investing more than $10 million in assets of two Laborers International Union pension funds in a risky real estate project.
“The department is committed to protecting the benefits of workers,” said Assistant Secretary of Labor Ann L. Combs. “Those entrusted to manage plan assets must do so for the benefit of workers.”
Trust Fund Advisors, Inc. (TFA) was hired as an investment manager to the Local Union and District Council and National Industrial Pension funds sponsored by the Laborers International Union. TFA hired ULLICO as a qualified professional asset manager to handle all real estate investments made on behalf of clients of TFA.
The defendants contracted with the pension funds in 1993 and 1994 to handle their investment in real estate.
The suit alleges that the defendants violated the Employee Retirement Income Security Act (ERISA) by imprudently investing more than $10 million of plan assets in a risky real estate project. Since 1995, the defendants used plan assets to purchase and develop a 120-acre tract of raw land in North Las Vegas into saleable building lots. The suit also alleges that ULLICO and TFA failed to properly investigate the merits of the Sommerset Ridge project and, ultimately, abandoned the project in 1997 without selling any lots. The funds suffered losses when the property was sold in June 1999 to Capital Pacific Holdings for less than the money invested by the funds.
The Labor Department is seeking a court order that requires the defendants to reimburse the trust funds for all losses, plus interest, resulting from the breaches; and permanently bars them from violating ERISA in the future.
One fund provides defined pension benefits for full-time officers and employees of affiliated locals and district councils. The other is a defined benefit plan covering employees of contributing employers who have collective bargaining agreements with the Laborers International Union. During the 1999 plan year, the LIUNA National Industrial Plan covered 30,609 participants and the LIUNA Local Union and District Council plan covered 6,375 participants. The plans had cumulative assets in excess of $1.2 billion.
The suit, filed in federal district court in Washington, D.C., resulted from an investigation conducted by the Philadelphia Regional Office of the department's Pension and Welfare Benefits Administration into alleged violations of ERISA.
(Chao v. Trust Fund Advisors
Civil Action No. 02-00559)
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Archived News Release — Caution: Information may be out of date.