Connecticut pension trustees sued by U.S. Labor Department for misuse of plan funds

Archived News Release — Caution: Information may be out of date.

Hartford, Connecticut – Trustees of the James T. Farrell III Money Purchase Pension Plan in Hartford misused more than $960,000 in plan assets to pay their personal expenses and operating expenses of Farrell Associates in violation of the Employee Retirement Income Security Act (ERISA), according to a lawsuit filed by the U. S. Department of Labor.

The suit, filed in the U.S. District Court for the District of Connecticut, alleges that trustee James T. Farrell III improperly transferred those assets to a bank account in his and Nancy Farrell’s names. It also alleges that Farrell attempted to conceal his actions from plan participants by fabricating participant statements and filing false Forms 5500 for plan years 2000 through 2003 with the Department of Labor and the Internal Revenue Service.

Nancy Farrell violated her duties as a trustee when she failed to ensure the plan’s assets were held in trust, thereby making her liable as a co-fiduciary for the violations.

“The employees of Farrell Associates are counting on this pension plan for their future retirement benefits,” said Bradford P. Campbell, assistant secretary of the department’s Employee Benefits Security Administration (EBSA). “The law is very clear that plan assets cannot be used to pay personal and corporate expenses unrelated to the operations of the plan.”

The suit seeks a court order to permanently bar the defendants from serving as fiduciaries or service providers to any ERISA-covered plan, restore all money owed to the plan with lost earnings, undo all prohibited transactions, disgorge all profits gained as a result of fiduciary breaches and appoint an independent fiduciary to be the plan’s trustee. The suit asks the court to require the defendants to properly calculate the benefit amounts of two participants and offset the defendants’ own account balances to make the other participants whole.

Farrell Associates is in the business of financial planning and sponsored the plan for four participants.

This legal action resulted from an investigation conducted by EBSA’s Boston Regional Office. Employers and workers can contact the Boston office at 617.565.9600 or toll-free at 866.444.3272 for help with any problems relating to private sector pension and health plans. In fiscal year 2007, EBSA achieved monetary results of $1.5 billion related to pension, 401(k), health and other benefits for millions of American workers and their families. Additional information can be found at www.dol.gov/ebsa.

Chao v. James T. Farrell III and Nancy Farrell
Civil Action Number 3:08cv01126-RNC

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