The Department of Labor has been busy since the new year began, and its latest action could be a really big deal for a lot of workers.

DOL filed suit against the International Order of Machinists National Pension Fund and its board of trustees for multiple violations of the Employee Retirement Income Security Act.

International Order of Machinists National Pension Fund

According to DOL, the trustees—Robert Roach, Warren Mart, Burton Trebour, Alfred Nelson, Lynn Tucker, Philip Gruber, Gary Allen, Robert Martinez Jr., and Thomas Connery—breached their fiduciary duty by failing to prudently select fund service providers, including consultants and fund investment managers; ignoring required procedures included in the fund's governing plan documents; creating conflicts of interest for the fund; unlawfully soliciting and accepting gratuities from plan service providers; and spending and permitting others to spend fund assets lavishly on unnecessary trips, parties and extravagant food, wine, and accommodations.

Read: 7 things fiduciaries shouldn't say in court

The IAMNPF, the fifth largest multiemployer pension plan in the U.S., has a funded status of 101 percent, according to a “Green Zone” notice sent to members in April of 2015. With more than 100,000 active participants and approximately $10.9 billion in assets, the fund pays pension benefits to more than 90,000 retirees and beneficiaries.

Read: Fiduciaries off the hook in Tussey v. ABB

The DOL's lawsuit seeks a court order requiring the defendants to restore any losses suffered by the fund due to the alleged violations and requiring the fund to implement reforms to prevent future ERISA violations.

“This case clearly shows how the fund and its trustees shirked fiduciary responsibilities to the detriment of pension fund participants,” Michael Schloss, acting director of EBSA's Philadelphia region, said in a statement. He added, “The department will not tolerate when fiduciaries fall short of their legal obligations, and will take every necessary action to hold them accountable.”

Gruber Systems

In addition to taking on the IAMNPF, DOL also won a judgment against Valencia, California-based Gruber Systems Inc., Gruber Systems Inc. Employee Stock Ownership Plan and John Hoskinson, the company's chief executive officer, that requires them to pay $1.1 million to participants.

An Employee Benefits Security Administration investigation led DOL to file suit alleging that the defendants caused the company's employee stock ownership plan to purchase company stock for significantly more than fair market value, resulting in losses to plan participants.

Instead of the money being set aside to fund the retirement accounts of Gruber retirees, DOL said it was steered into stock purchases to fund the financially distressed company.

The defendants have been permanently barred from serving as a fiduciary or service provider to any ERISA-covered employee benefit plan.

In addition, Gruber Systems and Hoskinson have been ordered to return $1.1 million to the company's employee stock ownership plan for the losses.

The judgment also requires Gruber Systems and Hoskinson to pay $220,000 in civil money penalties and orders the newly appointed plan trustees to distribute the plan's assets to the participants and beneficiaries, and terminate the plan.

Last but not least, Anthony Monaco, plan manager and fiduciary of the National Production Workers Union Severance Trust Plan, has been enjoined from serving as a fiduciary or service provider to any ERISA-covered plan in the future after an EBSA investigation found that he failed to properly oversee the proper allocation of expenses between the Severance Plan and the National Production Workers Insurance Trust Fund.

According to DOL, the investigation found several instances in 2010 when the Severance Fund improperly paid $11,359.00 in shared expenses that should have been paid by the Insurance Fund for administrative expenses.

Instead, Monaco allocated them to the Severance Fund. During the same period, the Severance Plan paid $13,420.12 in shared expenses that should have been paid by the Insurance Fund.

In addition, in November of 2012, the Severance Plan paid $32,678.50 in shared expenses that should have been paid by the Insurance Fund. All these were ERISA violations.

Monaco also failed to locate missing participants and make distributions to them. At least 10,192 participants with plan accounts totaling over $13,600,000, have funds that Monaco failed to distribute to them.

To top it off, Monaco improperly allowed the Severance Fund to transfer plan assets to other individuals and an affiliated 401(k) Plan. These additional improper transfers totaled $6,248.00.

Monaco has resigned; all the losses associated with the alleged violations in the complaint have been repaid to the plan, and distributions will be made to participants.

Instant Insights /

DOL takes on IAM pension plan, trustees

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