U.S. Labor Department Sues Trustees of Queens, N.Y. Union Employee Benefit Plans to Recover Plan Losses

Archived News Release — Caution: Information may be out of date.

New York, New York - The U.S. Department of Labor has sued the trustees of the welfare, annuity and pension funds covering members of the Material Yard Workers Local 1175, Laborers International Union of North America (LIUNA), based in Howard Beach, New York, to restore any losses caused by the trustees.

The defendants allegedly violated the Employee Retirement Income Security Act (ERISA) by using plan funds to pay salaries and other expenses not directly related to the operation of the plans. Named in the department’s lawsuit, filed in the U.S. District Court for the Eastern District of New York, are defendants Fred Clemenza, Anthony Ferrari, Frank Castiglione and Richard Grace, all trustees of the plans. Also named in the suit are the Material Yard Workers Local 1175 LIUNA Pension, Welfare and Annuity Funds, and Local 1175 Pension Fund Building Holding Corporation.

The suit alleges that the trustees caused or permitted the funds to pay a portion of the salaries and severance pay of two union employees and to pay credit card charges of one defendant and a union employee, without proof that the funds were obligated for the charges.

“The law is very clear,” said Assistant Secretary of Labor Ann L. Combs of the department’s Employee Benefits Security Administration (EBSA). “Plan assets must be used to benefit the workers who have earned them. Using plan assets to pay salaries, fees or expenses unrelated to the plan is unacceptable.”

The department’s suit asks the court to require the trustees to restore all losses plus interest or lost opportunity costs and to permanently bar them from serving as fiduciaries or service providers to any ERISA-covered plans. The suit also seeks to offset the benefits due to the defendants from the annuity and pension funds against the amount the defendants owe to the funds.

The suit resulted from an investigation by EBSA’s New York regional office. Employers and workers can reach EBSA at 212.607.8600 or toll-free number at 1.866.444.EBSA (3272) for help with problems relating to private-sector retirement and health plans. In fiscal year 2005, EBSA achieved record monetary results of $1.7 billion related to pension, 401(k), health and other benefits for millions of American workers and their families. For more information, visit www.dol.gov/ebsa.

(Chao v Fred Clemenza, et al)
Civil Action Number: 06-CV-2877

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