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Multiemployer plan fiduciaries must repay $4.7M in phony union expenses


Fiduciaries of a defunct national multiemployer benefit plan based in Cherry Hill, New Jersey, are liable for $4.7 million assets improperly diverted to a phony union, a federal judge has ruled.

As fiduciaries to the Professional Industrial Trade Workers Union Health & Welfare Fund, James Doyle and Cynthia Holloway violated the U.S. Employee Retirement Income Security Act by siphoning funds intended to pay for health benefits and plan administration costs and using them to cover the phony union’s expenses, the U.S. Labor Department said Monday in a statement.

“Mr. Doyle used this benefit plan as the guise for an illegal moneymaking scheme that jeopardized the well-being of countless workers and their families,” Assistant Labor Secretary Phyllis C. Borzi said in the statement. “Ms. Holloway was in a position to put an end to the fraud, but failed to act.”

According to court documents, employers and workers across the country paid approximately $7.4 million into the fund between 2000 and 2002. However, only $2.7 million was sent to claim administrators to pay health benefit claims.

At its peak, about 2,500 participants were enrolled in the plan, according to the Labor Department’s statement.

In a 37-page ruling handed down on Dec. 1 in a Trenton, New Jersey, federal court, Judge Joseph Rodriguez permanently barred Mr. Doyle and Ms. Holloway from serving as fiduciaries for any ERISA-covered employee benefit plan, and ordered them to restore $4.69 million to the benefit plan, including prejudgment interest.

Judge Rodriguez also ordered that an independent fiduciary be appointed to oversee the distribution of the plan’s assets as well as its eventual termination. The plan is no longer functioning but still exists as legal entity.

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