DOL accuses benefit plan trustees of embezzling $2.8 million

The Ministry of Labor asked an Illinois federal court to hold the trustees of a multi-employer welfare arrangement, the United Employee Benefit Fund, and its attorney liable for more than $2.8 million in losses after an investigation revealed that they had authorized the misappropriation of fund assets.

The Chicago-based UEBF provides life insurance benefits to approximately 63 employer-sponsored benefit plans nationwide.

The Labor Department’s complaint alleges that the fund’s trustees and its attorney committed multiple violations of the Employee Retirement Income Security Act from 2015 to 2018.

Investigators allege violations by trustees Gary Meyers and John Fernandez, administrator David Fensler, trustee and service provider Herbert McDowell and his company United Preferred Companies Ltd. and fund attorney L. Steven Platt, who was employed by the Chicago law firm Robbins, Salomon & Patt Ltd. .

Cited ERISA violations included transferring $1.125 million in assets from the fund to buy McDowell’s home out of foreclosure, transferring $400,000 in assets to the attorney representing McDowell in the foreclosure, and transferring $84,000 $ of assets directly to McDowell.

The suit seeks to recover losses and interest, permanently bar trustees and attorneys from serving as trustees and service providers to employee benefit plans, and appoint an independent trustee to take over the administration of the fund, including keeping accounts of all active plans and determining whether the fund should be terminated.

[More: Next iteration of DOL fiduciary rule catalyzes lobbying blitz on Capitol Hill]

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