U.S. Labor Department recovers misused funds for profit sharing plan of Brockton, Massachusetts, plumbing and heating company

Boston – The U.S. Department of Labor has obtained a consent judgment and order recovering more than $89,000 owed to the participants of the T.E. Corcoran Co. Inc. Profit Sharing Plan as a result of loans made to the plan sponsor and an affiliated company by plan trustees. The plan was sponsored by the plumbing and heating company based in Brockton, Massachusetts, for the benefit of the company’s employees.

The legal action followed a Labor Department lawsuit against T.E. Corcoran Co. and its owners, John F. Corcoran and Thomas E. Corcoran Jr., over alleged violations of the Employee Retirement Income Security Act (ERISA). The suit, filed in the U.S. District Court for the District of Massachusetts, also named as a defendant Coran Development Co. Inc., a company co-owned by the Corcorans. The suit alleged that the company and its owners caused the plan to lend money to the two companies at below market interest rates, without terms of payment and without documentation.

T.E. Corcoran Co. Inc. was the sponsor and administrator of the plan, while John and Thomas Corcoran were trustees of the plan, making all three fiduciaries and parties in interest with respect to the plan. ERISA specifically prohibits the use of employee benefit plan funds to benefit parties in interest.

Jean Ackerman, regional director of the department’s Employee Benefits Security Administration (EBSA) in Boston, said, “The law specifically prohibits the use of plan assets for any purpose other than the benefit of plan participants and beneficiaries. The filing of this court case demonstrates that the Labor Department will pursue the recovery of misused plan assets so that participants and beneficiaries receive the full retirement benefits to which they are entitled.”

The judgment and order require that the plan account balances of defendants John F. Corcoran and Thomas E. Corcoran Jr. be offset in the amount of $89,273 plus interest to be allocated to the accounts of the other plan participants. The offset will make whole all of the accounts of the non-trustee participants. In addition, the court order appoints an independent trustee to oversee the final distribution of the plan’s assets and the proper termination of the plan, requires the defendants to cooperate fully with the independent trustee in this process, and then prohibits them from serving as fiduciaries to any ERISA-covered plan for 10 years.

This case was investigated by EBSA’s Boston Regional Office. Employers and workers may reach the office at 617.565.9600 or toll-free at 866.444.3272 for help with problems relating to private sector pension and health plans. In fiscal year 2009, EBSA achieved monetary results of $1.3 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.

Solis v. T.E. Corcoran Co. Inc.
Civil Action Number: 1:09-CV-11842

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