The fiduciaries of a multiemployer retirement plan will have to make $4.7 million in restitution and interest payments after a federal judge in New Jersey ruled that the funds were improperly diverted.
James Doyle and Cynthia Holloway were identified by the Department of Labor as fiduciaries to the Professional Industrial Trade Workers Union Health and Welfare Fund.
The Cherry Hill, N.J., plan will eventually be closed. At one point, it had as many as 2,500 participants.
"Doyle used this benefit plan as the guise for an illegal moneymaking scheme that jeopardized the well-being of countless workers and their families. Holloway was in a position to put an end to the fraud, but failed to act," Phyllis Borzi, assistant secretary of Labor for the Employee Benefits Security Administration, said in a statement. She added that the government’s case should “send a message to those who think they can get away with conducting such an outlandish scheme."
U.S. District Court Judge Joseph H. Rodriguez found that the defendants violated the Employee Retirement Income Security Act last month.
Doyle and other individuals allegedly used the fake Professional Industrial Trade Workers Union as a “front” with “a scheme to operate a purported, union-sponsored employee benefit plan,” according to the Labor Department.
A DOL investigation further revealed that instead of the plan paying healthcare benefits and reasonable administrative costs, the money was used to cover “bogus expenses.”
The judge barred Doyle and Holloway from being a fiduciary or service provider to any ERISA-covered employee benefit plan. An independent fiduciary will now administer the plan they established until it can be closed.
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