DoL Sues Trustees over Plan Loan Violations

The U.S. Department of Labor has sued trustees of a benefit fund for violating the Employee Retirement Income Security Act (ERISA) regarding loans issued from the fund.

An investigation by the Employee Benefits Security Administration (EBSA) found the United Employee Benefit Fund’s trustees, David Fensler and Anthony Monaco, allegedly approved at least 194 loans from the fund to individual participants between January 1997 and December 31, 2009. Those loans were improper, unsecured, and allowed to become delinquent. Forty-two loans had no supporting documentation, and in some instances, the loans exceeded 50% of the value of the participants’ accrued benefit, which is a separate violation of ERISA.  

According to the announcement, as of December 31, 2009, none of the loans approved by the trustees had been paid back to the fund in full, and only six of the participants had ever made any payments on loans issued to them. Fensler and Monaco allegedly made no effort to enforce the terms of the loan documents or collect payments, in violation of the plan’s governing documents and ERISA.  

The suit seeks to recover all assets that may be available under the law, which amount to more than $1 million. It also seeks to require Fensler and Monaco to correct the prohibited transactions in which they engaged and to restore to the fund any losses, including lost opportunity costs, resulting from their fiduciary breaches.  

The United Employee Benefit Fund was established by the Professional Workers Master Contract Group and the National Production Workers Union Local 707 to provide welfare, medical, death, disability, and child care facility benefits to the fund’s participants. As of December 31, 2009, the fund had approximately 281 participants.  

The case is Solis v. David Fensler, Anthony Monaco and United Employee Benefit Fund, Civil Action Number: 1:11-cv-06031.