US - Trustees of the National Electrical Benefit Fund (NEBF) have been ordered by the US Federal District Court in Greenbelt, Maryland, to pay approximately $5m to the fund over the loan of pension plan assets to Columbia Land and Development (CLD).
The US Department of Labor (DoL) has obtained the court order against the NEBF's trustees, for what it calls the imprudent loan of pension assets and purchase of shares in a limited partnership with CLD in 1992 and 1993.
As a result of the court order, the NEBF's trustees will have to pay $4.95m to the fund as restitution. It also states that trustee John Grau and former trustee Jack Moore will have to pay a civil penalty of $550,000 each.
The DoL began legal action against the pension fund's trustees in 1999, claiming that the trustees were negligent in loaning assets to CLD to help finance the company's planned acquisition and development of land in Florida. The DoL also claims that the trustees should have known that the loan could not be repaid in full with interest.
Speaking about the court order, Elaine Chao, US labor secretary, said: This aggressive settlement is part of our commitment to crack down on pension fund abuses by union and management officials. We will do everything in our power to protect union members' pensions from being preyed upon and misspent.
The NEBF is a collectively bargained defined benefit pension plan funded by the contributions of participating employers. The fund covers over 440,000 union workers and has approximately $9.5bn in assets.
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