U.S. Labor Department sues to appoint independent fiduciary for troubled construction contractor plans

New York – The U.S. Department of Labor has filed a lawsuit asking the U.S. District Court for the Eastern District of New York to appoint an independent fiduciary to oversee an entity called the Contractors Benefit Trust (CBT), which has control over several dozen employee benefit plans established by construction industry employers in the New York City and Long Island areas.

CBT and the employee benefit plans in its control functioned under the sole trusteeship of Steven Coren, who is about to be legally disqualified from staying in his position due to a criminal conviction expected to be entered in federal court shortly. When Coren is removed, CBT and the employee benefit plans could be left untended by active management and unable to pay benefits to the rightful participants. As CBT has not designated anyone to act in Coren’s place, the Labor Department is beginning this legal action.

The CBT entity and the plans were set up to take contributions from participating employers on behalf of their employees and use those contributions to pay supplemental benefits – such as medical, life insurance, dental and disability – under applicable prevailing wages.

The department’s suit alleges that Coren was the sole trustee of CBT. The suit notes that Coren has pleaded guilty and is to be formally convicted and sentenced for violations of various federal statutes. As a result, Coren will be legally unable to continue functioning as a trustee and fiduciary for any employee benefit plan covered by the federal Employee Retirement Income Security Act (ERISA).

Therefore, the suit asks the court to appoint an independent fiduciary to administer CBT and the plans established under its umbrella with the power to distribute the assets of CBT and the plans to the proper participants and beneficiaries. In the absence of a legal fiduciary, plan participants and beneficiaries would be unable to obtain their rightful benefits.

“It is the Labor Department’s position,” said Jonathan Kay, regional director of the Labor Department’s Employee Benefits Security Administration (EBSA) in New York City, “that employee benefit plan participants should not be penalized simply because the sole trustee of the plan is disqualified from service by criminal convictions. The law allows us to petition the court to appoint an independent trustee and fiduciary to administer employee benefit plans in situations like this so that the participants can receive the benefits to which they are entitled as the result of their employment.”

This case was handled by EBSA’s New York Regional Office. Employers and workers can contact that office at 212.607.8600 or toll-free at 866.444.3272 for help with any 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 http://www.dol.gov/ebsa.

Solis v. Contractors Benefit Trust
Civil Action Number: 09-CV-5724

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