Judge Orders $39.8 Million Repaid to Benefit Plans
A Philadelphia federal judge has ordered restitution and barred defendants as fiduciaries and service providers.
The Labor Department announced that a federal district judge in Philadelphia has ruled that John J. Koresko V must make restitution of $39.8 million to more than 400 death benefit plans he mismanaged. Koresko, as well as the companies he controlled and a former associate, are permanently barred from serving as fiduciaries to any employee benefit plan.
This follows a 2009 lawsuit filed by DOL. The judge ruled that Koresko and other defendants diverted tens of millions of dollars in plan assets through more than 21 accounts using more than 18 different entities at more than eight banks. This money was used for real estate purchases in South Carolina and the Caribbean island of Nevis, to pay outside attorneys, lobbying expenses, operational expenses of Penn-Mont Benefit Services, Inc., and Koresko's law firm, as well as his personal expenses, such as boat rentals and utilities. This violates the Employee Retirement Income Security Act.
"The defendants completely disregarded the duty of loyalty they owed to the employee benefit plans and the workers who rely on them," said Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi. "In an ideal world, this does not happen. When it does, there is justice in undoing this massive fraud and in banning the defendants from coming anywhere near employee benefits again."
The plans primarily provided death benefits to participants nationwide and were established in connection with Koresko's Regional Employers' Assurance Leagues Voluntary Employees' Beneficiary Association and Single Employer Welfare Benefit Plan, according to DOL's news release.