DOL Alleges ULLICO Imprudently Invested $10 Million

The Dep’t of Labor sued Washington, D.C.-based Trust Fund Advisors, Inc.,  and its parent, ULLICO Mar. 22 for imprudently investing more than $10 million in assets of two Laborers’ Int’l Union of N. Am. pension funds in a risky real estate project. LIUNA hired TFA as a union fund manager for the Local Union and District Council Pension Fund and Nat’l Indus. Pension Fund. TFA hired ULLICO to handle all real estate investments made on behalf of clients of TFA. ULLICO-TFA contracted with the pension funds in 1993-94 to handle their investment in real estate. Admitted criminal and ex-LIUNA boss Arthur A. Coia was elected to ULLICO’s board in 1993 and was on the board as of Sept. 30, 2000, according to a State of N.Y. Ins. Dep’t document.

The suit alleges that ULLICO-TFA violated the Employee Retirement Income Security Act of 1974 by imprudently investing more than $10 million of plan assets in a risky real estate project.  In 1995, TFA and ULLICO used plan assets to purchase and develop a 120-acre tract of raw land in N. Las Vegas into saleable building lots. ULLICO-TFA, incorporated as LF Las Vegas Realty Corp., paid close to $6 million for the property and spent more than $4 million to develop it. The suit also alleges that TFA and ULLICO failed to properly investigate the merits of the Sommerset Ridge project (failed to obtain an appraisal) and, ultimately, abandoned the project in 1997 without selling any lots. The funds suffered losses when the property was sold in June 1999 to Capital Pacific Holdings for less than the money invested by the funds.

DOL is seeking a court order that requires ULLICO-TFA to reimburse the funds for all losses, plus interest, resulting from the breaches; and permanently bars them from violating ERISA in the future. The suit was filed in federal court in Washington, D.C. [DOL 3/25/02; BNA 3/27/02]

Texan Indicted for $94,400 Union Theft
A federal grand jury in Houston indicted Cheryl L. Rowe, ex-office secretary for the Laborer’s Int’l Union of N. Am. Local 80 in Texas City, Tex., Mar. 15  on union embezzlement charges. Allegedly, Rowe embezzled $93,430.22 in union dues she collected between July 1997 and July 2000. [USAO S.D. Tex. 3/15/02]