US Labor Department sues trustees of IATSE Local 829 retirement and benefit plans to undo prohibited transactions, account for misused funds

NEW YORK – The U.S. Department of Labor has filed a lawsuit against the trustees of the pension plan, annuity fund and vacation fund of Exhibition Employees Local 829 of the International Association of Theatrical Stage Employees in New York for numerous violations of the Employee Retirement Income Security Act. The suit, filed in the U.S. District Court for the Southern District of New York, resulted from an investigation by the New York Regional Office of the department’s Employee Benefits Security Administration.

The suit alleges that the defendants violated their fiduciary duties as trustees by engaging in a series of prohibited financial transactions between 2006 and the present. These include the improper transfer of more than $2.9 million in assets from Local 829’s pension plan to the union and its annuity, vacation and hiring hall funds, as well as the improper transfer of at least $240,000 from the pension plan and annuity fund to service providers. Additionally, the defendants allegedly allowed the annuity fund to retain at least $5.9 million in undocumented and inadequately secured loans to fund participants, including Local 829 President John V. McNamee Jr., and they failed to prudently investigate or evaluate the annuity fund’s investment of more than $5 million into an illiquid real estate investment trust.

“These trustees have violated their basic responsibility to administer the plans prudently and solely in the interests of the plans’ participants, and no one else,” said Jonathan Kay, EBSA’s New York regional director. “We seek to impose upon these defendants the additional responsibilities of accounting for and correcting their violations, and providing the necessary information and assistance to ensure that the plans are properly managed in the future.”

The suit asks the court to order the defendants to correct the prohibited transactions and restore to the plan all losses attributable to their breaches, plus interest, as well as to remove the defendants as fiduciaries to the plans and permanently enjoin them from ever again serving as fiduciaries or service providers to any ERISA-covered plan. The suit also seeks the appointment of an independent fiduciary with plenary fiduciary authority and control over the plans, and requires the defendants to provide an equitable accounting of the whereabouts and status of the plans’ assets, liabilities, investment gains and losses, income earned and payments received by the plans since March 1, 2006. Finally, the suit seeks to require the defendants to preserve and provide to the Labor Department all books, records and documents relating to the finances and administration of the plans.

The case was filed by the Labor Department’s Regional Office of the Solicitor in New York. For help with problems related to private sector pension and health plans, employers and workers can contact EBSA’s New York office at 212-607-8600 or toll-free at 866-444-3272. Additional information can be found at www.dol.gov/ebsa.

Solis v. John V. McNamee Jr., Kevin Dunphy, Manuel Farina, John T. Hall, John Hamilton, Michele Sullivan, John Walsh, Exhibition Employees Local 829 IATSE Pension Plan, Exhibition Employees Local 829 IATSE. Annuity Fund and Exhibition Employees Local 829 IATSE Vacation Fund.

Civil Action Number: 12-CV-1511

U.S. Department of Labor news materials are accessible at www.dol.gov. The information above is available in large print, Braille, audio tape or disc from the COAST office upon request by calling 202-693-7828 or TTY 202-693-7755.