Three retired carpenters — Horacio Grana, Phillip R. Helsius, and Walter J. Sprenger — filed a suit Jan. 14 seeking the removal of penion plan directors and advisors for alleged self-dealing and other ERISA violations. The federal suit charged that Douglas McCarron, UBC president, and other directors of the Carpenters Pension Trust Fund for S. Cal. and the UBC Pension Fund authorized imprudent investments into entities owned or controlled by the plans’ advisor, Richard C. Blum, husband of Sen. Dianne Feinstein (D-Cal.).
The plaintiffs seek a court order allowing them to recover documents relating to the investments from the two funds; removal of both plans’ trustees and Blum; a prohibition against the defendants from using plan assets to defend themselves; and, all allowable statutory and compensatory damages.
Investments were allegedly made to protect McCarron and others’ holdings in Perini Corp., a financially ailing construction company. Hundreds of millions of dollars of Perini assets were then transferred to Ronald N. Tutor, a trustee of the S. Cal. plan. The assets were transferred “…at prices highly favorable to Tutor and highly disfavorable to Perini and its shareholders, including (indirectly) the [pension plans],” the suit charged. Blum, Tutor, and McCarron knew or should have known that Perini was in serious financial trouble, having lost more than $27.5 million in 1995. They made the investment anyway, “…in order to protect Tutor’s and McCarron’s investment in Perini and without regard to the fact that prudent investments were available…” to the two funds, according to the suit.
In addition to the Perini, the S. Cal. plan allegedly made other investments in entities in which Tutor, McCarron and other plan trustees had financial interests. Those investments were imprudent, and some or all of the assets in question were transferred in whole or in part to defendants or entities they control or have interests in, “at prices well below book value,” it said. [L.A. Times 1/19/00; BNA 1/26/00]