US Labor Department recovers nearly $440,000 for union employee benefit plans from current and former trustees of the plans

PROVIDENCE, R.I. – The current and former trustees of several retirement, health and welfare plans of the International Brotherhood of Electrical Workers Local Union No. 99 in Cranston, R.I., were ordered to repay $439,755.62 to the plans as restitution for violating the Employee Retirement Income Security Act, according to a consent order and judgment obtained by the U.S. Department of Labor.

“Our legal action restores to the plan assets that were improperly used to benefit these defendants at the expense of workers’ retirement, health and other benefits. The department will vigorously pursue violations of the law to ensure that plan assets are protected and available to pay future benefits to workers,” said Assistant Secretary of Labor for the Employee Benefits Security Administration Phyllis C. Borzi.

The lawsuit, filed in the U.S. District Court for the District of Rhode Island, alleged the defendants misused plan assets of the International Brotherhood of Electrical Workers Local Union No. 99 Retirement Fund, and failed to obtain information sufficient to enable the trustees to prudently evaluate the propriety of the legal bills of the union’s retirement fund, annuity plan, health and welfare trust fund, and the apprenticeship and training trust. Named as defendants in the suit were current and former trustees John Badessa, Thomas Chabot, Robert Chatterley, Thomas Demers, Allen P. Durand, Ronald Leddy, Peter Leone, Jack Magee, William O’Rourke, John P. Shalvey, Jay Strauss, Arthur Watson and David Wyman.

Since all of the defendants were considered to be parties in interest under the law, several were alleged to have dealt with plan assets for their own benefit or for the benefit of close relatives. Others were alleged to have violated ERISA by failing to obtain sufficient documentation or justification to properly evaluate the legal bills submitted by the plans’ attorneys, Rodio and Ursillo Ltd. of Providence, R.I. In addition, some trustees allegedly caused or permitted the retirement plan to pay out over $400,000 in unwarranted pension benefits by improperly allowing Local 99 members to receive pension credits for work at the Millstone Nuclear Power Plant in Connecticut.

The judgment orders the defendants to pay $439,755.62 in restitution to the Local 99 retirement fund, investigate the qualifications of service providers to the plans, provide the service provider with complete and accurate information, and conduct a prudent and sufficient investigation to ensure that reliance on the service provider’s advice is reasonably justified under the circumstances. In addition, the defendants must ensure that adequate and accurate records are established and maintained by all service providers to the plans and the fiduciary defendants are barred from using their authority to pay a fee for a service in which the fiduciary has a personal interest.

This case was investigated by EBSA’s Boston Regional Office in Massachusetts, which can by reached at 617-565-9600. Employers and workers may also call 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. EBSA is an agency of the U.S. Department of Labor. Additional information can be found at http://www.dol.gov/ebsa.

Solis v. John Badessa
Civil Action Number: 1:10-CV-00437-ML-LDA

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